Close to your retirement, then understand the importance of putting a plan in place. Further to plan for your income in retirement. The truth is that social security. If you’re fortunate enough to have a pension are probably not going to be enough to cover the expenses that you have in retirement. What it means is that you are going to use the other sources for income probably using your own savings. It is to generate enough income to cover your expenses and there is a lot different strategy you can use to generate income if you plan it properly:
Post office scheme is a 5-year investment scheme which has maximum limit of Rs 4.5 lakh under single ownership and Rs. 9 lakhs under joint ownership. The interest rate is currently at 7.8% annually, payable monthly. The investment in post office doesn’t provide any tax benefit and the interest is fully taxable.
Creating Dividend portfolio:
By creating portfolio with full of quality stocks having good record of paying dividend. One can use the money earned from dividend to pay your retirement expenses. Upside to this is that your portfolio is always liquid. This means you can sell the stocks whenever you wanted to. Also you would be just being living of the dividend from the portfolio and not spending your original investment. So, here you would have to put more money into this portfolio to generate the same amount of income. Even the dividends are not guaranteed so your income source would not necessarily be guaranteed if a company decided to lower the dividend that its going to pay.
They are tax-free and like the dividend strategy, you just be using the interest that they generate. Downside to this is that there is credit risk that you must be aware of when it comes to municipal bonds. Also, you are just spending interest income off this portfolio it might take to generate the same amount of income.
Maximize your social security:
One of the ways you can do this is if you continue to work at age of 65 to 68 that will help to boost your income.
Immediate annuity schemes of life insurance companies. The rate of pension or the annuity is currently around 5 to 6 %pa and it is entirely taxable. There is no provision of return of capital to the investor, i.e., the corpus or the amount used to purchase annuity is non-returnable. There are multiple option available in this category.