Senior Citizens and Retirees whose sole source of income is Interest earned form the Fixed Deposits they do in the Banks , especially Nationalised banks such as State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda in all there are 12 Government owned banks operating in India apart from their private counterparts for better safety.
The new problem which they have started to face is the case of High inflation resulting in increased cost of living and falling interest income.
Official data released on Thursday showed that consumer price index (CPI) based inflation for July was at 6.93% much above the Reserve Bank of India limit of 6% at a time when RBI has been constantly from past 2 years reducing the policy rates to boost consumption and spur economic revival which has taken the backstage since the start of demonetisation of old 500 and 1000 notes.
Now the rates for Senior Citizen Fixed deposit schemes by banks vary in the range of 6 % to 7 % on maturity from 1 to 10 years and for lower tenure the interest rate is even lower. If we compare this with the adjusted inflation the real rate of return comes to zero or negative means these retirees and senior citizens have so shell out more from their pocket to makeup for the increased cost of living.
Here we have not calculated the taxation on the Fixed deposits if we include that we will see the post tax returns will vary in the range of 4 to 5% which is clearly less than what they get from their banks on their hard earned deposits which they accrue whole through their life for livelihood in old age.
Hence they should also look for alternate investment options which will make good for the inflation adjusted returns, in our next article next week we will detailed out the options where in senior citizens and retirees can invest to get good returns and extra safety for their money.
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