How to ensure Financial Independence for your parents this Independence Dayij

Parents devote a major pie of their income towards funding education, wedding or any other big or small desires and necessities for their children. It is hence, important to ensure security of their future and retirement. This Independence Day, select from lucrative senior citizen investment options for your parents and assure their freedom freedom. Here’s how you can go about doing this. 

1. Budget their monthly expenses and split the cost with them

Sit with your parents and work out a budget of their monthly necessities such as medicine, grocery, utility bills, rent, and luxury spends. Include everything that they pay for or spend to maintain their present lifestyle. Once you are ready with the budget, you can split these expenses between you and your parents or you and your siblings, if any, after their retirement. 

Instead of paying for your share from your own income, invest a part of your savings into a cumulative FD. Depending on their retirement, set a tenor for Fixed Deposit. Once they retire and your FD matures, reinvest the matured sum via a non-cumulative senior citizen FD. FDs are one of the safest investment options for retirement so choose the best FD planand start devoting a fraction of your excess income to ensure your parents enjoy financial independence after retirement. 

2. Talk to them about the right FD for their golden years 

When your parents retire, they are bound to get lump sum gratuity from their present organization. Similarly, they will also receive the entire EPF sum or PPF investment with interest. With you splitting their regular monthly expenditure with them, you can ask them to park one part of their money in cumulative FDs and the other part in non-cumulative FDs. After maturity they can use the earnings from their cumulative FDs to fund their larger post-retirement plans. On the other hand, they can utilise the interest income from the non-cumulative FDs for everyday essentials. 

As per RBI guidelines, senior citizen FDs will fetch them at least 0.35% higher interest on their investment. So, choose to invest with ICRA’s MAAA (stable) rating and CRISIl’s FAAA/Stable rating Bajaj Finance Fixed Deposit schemes. With this FD, their money will be parked to safety earning higher FD interest rates of up to 8.75%. You can also help them compute their returns by checking the maturity amount using the FD calculator. 

3. Guide them with the other avenues for investment

The key to good retirement planning for your parents is looking for options that will generate good returns while minimising risk. While they may bank predominantly on income from a PF and FDs, there are other ways to make their money grow after retirement. 

Take help from a financial advisor and park a substantial sum in mutual funds, government bonds or other moderate risk avenues and not via stock market. If your parents have another home or a property, help them put it on rent to earn regularly. 

Remember the following points for better retirement planning for your parents. 

Armed with these guidelines, you can ensure a smooth retirement and secure future for your parents. Help your parents take the first step towards independence, as we celebrate our Independence Day.