FD for Retirement Planning to Secure Your Future

That secure feeling when you have built a substantial corpus for your golden years is absolutely comforting. As you start retirement planning, you will understand the importance of a steady, hassle-free income. One of the simple and rewarding ways to build a corpus and get regular returns is through fixed deposits (FDs).

The earlier you start, the more rewarding it will be. So, start planning for your retirement and open a fixed deposit today. Taking small, steady steps now will ensure you can enjoy financial security and peace of mind in the future. 

How can an FD help you during retirement?

Guaranteed returns 

FDs provide a fixed interest rate, ensuring your savings grow predictably over time without the volatility of the stock market. It gives you a steady income source without taking on risk during retirement years​. 

Regular income 

You can choose non-cumulative FDs to get regular pay out of interest, be it monthly, quarterly or annually. This can act as a regular income stream, replacing your salary and helping you to manage living expenses easily​.  

Higher interest for senior citizens 

Banks and financial institutions offer senior citizens a higher interest rate on FDs. It is often between 0.25% and 0.65% more than regular FDs. This can boost your savings without additional effort​ during retirement.  

Tax benefits 

Tax-saving FDs under Section 80C of the Income Tax Act allow you to claim deductions up to ₹1.5 lakh, helping you reduce your taxable income. This can be a significant advantage during retirement​.  

Security and flexibility 

FDs are one of the safest investment options, as they are not affected by market fluctuations. Additionally, FDs offer flexibility in terms of tenure, allowing you to pick durations ranging from a few months to several years, depending on your needs.  

How can you use your FDs during retirement? 

Health-related expenses 

FDs can serve as a safety net for unplanned medical expenses. With rising healthcare costs, you can either use the sum or take a loan against it to cover hospital bills, surgeries or long-term care​.  

You can also use the regular interest payouts from non-cumulative FDs to cover annual health insurance premiums. It can ensure your healthcare needs are met without depleting your primary savings​.  

Travel plans 

If you dream of travelling after retiring, FDs can be planned to mature around your travel dates. They provide you with a lump sum to fund vacations or visits to family abroad. So, you can enjoy dedicated funds for leisure without stretching your budget​.

FDs also provide liquidity, so you have the option to quickly access funds by breaking it or making partial withdrawals. This is beneficial in case you need to travel suddenly for emergencies, such as family health issues or important events.  

Home maintenance 

As you age, your home may also require more frequent repairs or upgrades, like installing safety features or energy-efficient appliances. FD returns can also be utilised to cover unexpected home renovation expenses. They allow you to manage these costs without dipping into your primary savings​.  

Gifting to children, grandchildren 

FDs can be gifted or used for your children’s or grandchildren’s weddings, education or other significant milestones. You can make contributions easily without disturbing your financial stability during retirement​. 

Charity 

Planning to give back to the society? Use FDs to set aside funds specifically for charitable donations. When it matures, you’ll have a dedicated amount ready to contribute to causes you care about​.  

Your interests 

Retirement often provides the time to pursue your hobbies like gardening, painting or joining clubs. FDs with periodic interest payouts can help you fund these activities without a stretch.  

Conclusion

It is recommended that you opt for long-term lock-in periods, like 5 to 10 years, to earn more over a long period. If you are investing for growth, choose a cumulative plan and for regular income, select non-cumulative FDs. Resist the need to break an FD early, as it usually results in penalties and lower interest rates. Instead of this, you can consider taking a loan against FD for emergencies.