Do you have taxable income after retirement? Get to know the best tax-saving investment option for you


People who earn regular income through investment must look for ways to increase their income over the years to meet higher monetary requirements to keep pace with inflation.

There can be two types of income for a person who has retired from working life. Civil servants covered by the Old Pension Scheme (TSO) receive a lifelong pension adjusted for inflation, which increases with the level of price growth and the revision of pay scales through payment commissions. Other people can earn regular income by investing their pension corps in various ways of investing that are available to senior citizens and other investors.

As retired civil servants receive a guaranteed regular pension for life, they can choose any tax-saving option available to save tax because they do not have to worry about increasing investment income to keep up with inflation.

However, people who earn regular income through investment must look for ways to increase their income over the years to meet higher monetary requirements to keep pace with inflation. This is because, unlike retired civil servants who receive an inflation-adjusted pension, the return on investment in fixed-income instruments for other retirees not only does not increase with rising price levels, but erodes due to lower interest rates. on such investments.

With interest rates lagging behind the inflation rate, capital invested in fixed-income instruments is gradually losing purchasing power – especially after paying interest taxes – which undermines the prospect of receiving higher returns from the pension corps.

So, while investing in tax savings, such investors should keep in mind the need to increase their pension corps in order to improve their earning capacity to fight inflation and maintain their standard of living.

As retired investors mostly rely on fixed-income instruments to generate stable income, they need to invest in tax savings in a way that, in addition to tax savings, invested capital grows over time and gives them tax-efficient returns.

As tax saving instruments such as the Public Security Fund (PPF), the National Savings Scheme (NSC), etc. provide a similar return as other fixed income instruments, instead of re-choosing such instruments, retired employees should take some calculated risks and invest in the long-term Capital Savings Scheme (ELSS) to ensure the growth of their pension corps to generate higher income in the long run to keep pace with inflation to maintain their standard of living.

Thus, while retired civil servants receiving an inflation-adjusted pension are free to invest in fixed-income tax savings instruments such as PPF, NSC, FD, etc., other retired persons who already rely on fixed-income instruments to realize their income, they may not have other options, but to take certain risks and choose capital-oriented tax-saving instruments, such as ELSS, to ensure that they do not jeopardize their standard of living after failing to match price growth in the long run. year.

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