Advantages Of Senior Citizen Fixed Deposit Schemes For Securing Retirement Finances

Retirement is a significant milestone in one’s life, and it is essential to plan it meticulously. It is important to plan your finances as a senior citizen to enure good returns and a good standard of living. 

For senior citizens in India, fixed deposit (FD) schemes are safe investment options which offer attractive interest rates and several other benefits. Read on to find out more.

Advantages of Fixed Deposit Schemes for Senior Citizens

Below are the main advantages of FD schemes for senior citizens.

Higher Interest Rates

Senior citizens often face a significant challenge in earning a regular income post-retirement. The FD schemes for senior citizens offer higher interest rates than regular fixed deposits. 

The senior citizen fixed deposit interest rates range from 6.5% to 7.5% for most leading banks, while regular fixed deposit rates range from 4% to 5%. Thus, they earn a higher interest income, ensuring a steady cash flow.

Guaranteed Returns

Fixed deposits are a safe investment option as they offer guaranteed returns. 

The principal amount invested in the fixed deposit remains intact, and the interest earned is regularly credited to the investor’s account. 

Flexible Tenure Options

FD schemes offer flexible tenure options. Senior citizens get to choose a fixed deposit for 1 year to ten years. They can choose a tenure that aligns with their retirement goals and requirements. 

For instance, senior citizens who want to earn regular income can opt for a one-year fixed deposit, while those who wish to invest for the long term can choose a higher tenure.

Loan Against Fixed Deposits

Senior citizens who have invested in fixed deposits can avail of loans against their deposits. The loan amount is usually up to 90% of the deposit amount and carries a lower interest rate than other loans. 

Thus, fixed deposits can be used to meet financial requirements without breaking the deposit.

Tax Benefits

The interest earned on FDs is taxable per the investor’s tax slab. However, senior citizens can claim a deduction maximum of INR 50,000 under Section 80TTB of the Income Tax Act on the interest income earned on fixed deposits. 

Thus, senior citizens can reduce their tax liability and earn higher post-tax returns.

Regular Income Stream

The interest earned on the FD is paid out at regular intervals, such as monthly, quarterly, or annually, depending on the scheme.

This feature makes them an attractive investment option for those looking for a steady and reliable source of income during their retirement years.

Easy Accessibility and Convenience

These schemes can be opened easily at any bank or financial institution, with minimal documentation and formalities. Senior citizens can also invest in these schemes online from the comfort of their homes, making it a convenient option. 

Moreover, the funds invested in these schemes are easily accessible in case of emergencies or financial needs, ensuring that retirees have a backup source of funds to fall back on.

Low Risk and Stability

Unlike other investments subject to market risks, FD schemes for senior citizens are backed by the government or financial institutions, providing a guarantee of capital protection. 

Additionally, the rate of interest offered on these schemes is fixed, providing a predictable and stable return on investment. 

Protection Against Inflation

The senior citizen fixed deposit interest rates are higher than regular fixed deposits, providing a hedge against inflation. The interest earned on these schemes can help retirees maintain their purchasing power and keep up with the rising prices.

Moreover, these schemes offer the option of reinvesting the interest earned, which can further enhance their returns. 

Options For Joint Fixed Deposits

Senior citizen FD schemes also offer the advantage of joint fixed deposits. This is a great option for couples looking to secure their retirement finances. 

By investing in a joint fixed deposit, senior citizens can pool their resources and earn a higher interest rate than individual fixed deposits. 

In case of the demise of a depositor, the other one can continue to receive the interest income and get the deposit amount back at maturity.


FD schemes for senior citizens are a reliable investment option for securing retirement finances. The higher senior citizen fixed deposit interest rates, guaranteed returns, flexible tenure options, loans against fixed deposits, and tax benefits make fixed deposits an attractive investment option for senior citizens. 

Moreover, with the ease of online banking, investing in fixed deposits is more convenient than ever. You can apply for one with trusted banks for a secure future.