Best Investments for a Monthly Income Plan After Retirement (2025)

10 min read Posted on 3 Jun 2025

A monthly income plan after retirement is essential for maintaining financial independence and meeting daily expenses such as utility bills, healthcare, and lifestyle needs. With salary income ceasing post-retirement, a well-structured investment strategy ensures regular cash flow without exhausting core savings. This article outlines the best senior citizen monthly income schemes in 2025, covering low-risk, reliable options for different financial profiles.

This article outlines the best senior citizen monthly income schemes in 2025, covering low-risk, reliable options for different financial profiles.

Best Senior Citizen Monthly Income Scheme 2025 

A well-structured monthly income plan enables senior citizens to derive stable returns from accumulated savings. Below are the top post-retirement income options to consider:

1. Fixed Deposits and Recurring Deposits

Fixed and recurring deposits offered by banks and post offices are traditional, low-risk options that provide fixed interest income. 

The Post Office Monthly Income Scheme (POMIS), in particular, offers consistent returns and tax benefits for senior citizens. Plus, Section 80TTB lets you keep up to INR 50,000 interest tax-free in a financial year. 

• Interest Rate: 7.4% per annum, payable monthly.
• Investment Limits: Up to ₹9 lakh for individual accounts and ₹15 lakh for joint accounts.
• Taxation: Interest income is taxable; however, Section 80TTB allows senior citizens to claim up to ₹50,000 as a deduction on interest income.

2. Pradhan Mantri Vaya Vandana Yojana (PMVVY)

It is one of the best senior citizen monthly income schemes for 2025. PMVVY is a government-backed annuity scheme for individuals aged 60 and above. It ensures fixed payouts for a decade, making it ideal for risk-averse retirees seeking income stability.

• Interest Rate: As of the latest update, the scheme offers an assured return, with the exact rate subject to periodic revisions.
• Payout Options: Monthly, quarterly, half-yearly, or yearly, based on the subscriber's choice.
• Tenure: 10 years.

3. Senior Citizen Savings Scheme (SCSS)

Offered via banks and post offices, SCSS stands out for its higher interest rate and tax perks. You're eligible for this scheme if you're 60 or older. But you can also apply if you've retired between 55 and 60 under Superannuation, VRS, or Special VRS. For retired defence personnel (not including civilian defence staff), the minimum age is 50, subject to certain conditions.

You can start with a minimum of INR 1,000 and deposit in multiples of INR 1,000. The maximum deposit allowed is INR 30 lakhs. Interest is paid out quarterly: on the first working day of April, July, October, and January. So you get four payouts a year.

• Interest Rate: 8.2% per annum, payable quarterly.
• Investment Limit: Up to ₹30 lakh.
• Taxation: Interest income is taxable; however, investments qualify for deduction under Section 80C up to ₹1.5 lakh.

4. Mutual Funds with Monthly Income Plans

Monthly Income Plans (MIPs) in mutual funds offer a combination of growth and potential income through Systematic Withdrawal Plans (SWPs). These are market-linked and subject to performance fluctuations, but they may provide returns that outpace inflation. However, it's better to review the new tax regimes before investing in any mutual fund. 

Here's a quick comparison of select mutual funds based on category, size, costs, and past returns:

1. Motilal Oswal Midcap Fund

• Category: Mid-Cap
• AUM: ₹27,780 Crores (as of 31/03/2025)
• Expense Ratio: 0.70%
• Exit Load: 1% if redeemed within 1 year
• 3-Year CAGR: Approximately 25.36%

2. Bandhan Small Cap Fund

• Category: Small Cap
• AUM: ₹10,244.10 Crores
• Expense Ratio: 0.39%
• Exit Load: 1% if redeemed within 1 year
• 3-Year CAGR: Approximately 135.87%

3. HDFC Defence Fund

• Category: Thematic – Defence
• AUM: ₹5,487 Crores (as of 31/03/2025)
• Expense Ratio: 0.74%
• Exit Load: 1% if redeemed within 1 year
• 3-Year CAGR: Not applicable (launched in May 2023)

4. SBI PSU Fund

• Category: Thematic – PSU
• AUM: ₹5,035 Crores (as of 30/04/2025)
• Expense Ratio: 0.82%
• Exit Load: 0.5% if redeemed within 30 days
• 3-Year CAGR: Approximately 28.44%

5. ICICI Prudential PSU Equity Fund

• Category: Thematic – PSU
• AUM: ₹2,031.44 Crores
• Expense Ratio: 0.94%
• Exit Load: 1% if redeemed within 1 month
• 3-Year CAGR: Not applicable (launched in August 2022)

5. National Pension System (NPS)

NPS is a low-risk monthly payout plan. It helps you choose how your money is split across equities and bonds. It gives you tax relief under Section 80C and 80CCD(1B). This makes it a two-way benefit: tax savings now, regular income later.

Additionally, the final amount you receive from NPS will depend on the total amount you've added during your working years, the performance of the investments, and the amount you choose. 

Why Do You Need Low-Risk Monthly Payout Plans?

When your income slows down or becomes uncertain, monthly income plans after retirement offer steady cash flow without exposing your savings to high volatility. These plans are ideal if you want predictable returns. Key advantages include:

1. Regular Income

Markets can often present unexpected fluctuations, whereas obligations such as bills remain predictable. A low-risk monthly payout plan effectively solves this challenge by providing a stable income stream that remains unaffected by market variability. Since these plans prioritise stability over high returns, you can count on the payouts to manage recurring costs like groceries, medicines, or utility bills. This way, you're not forced to dip into your savings or depend on someone else to fill the monthly shortfall.

2. Lower Exposure to Market Volatility

These plans primarily invest in government bonds, fixed-income securities, or debt funds. It's a safer way to generate cash flow when trying to protect the amount you've already built.

3. Helpful for Retirees and Conservative Investors

These plans are a comfortable fit if you're close to retirement or prefer not to take chances. Retirees often need monthly funds to replace their salary, and conservative investors value peace of mind more than aggressive growth. These payout plans are suitable for both because they offer a dependable income with minimal stress about market news.

4. Liquidity Without Disturbing Long-Term Investments

You may have long-term investments locked in for future goals, but that doesn't solve the immediate question: "How will I manage my monthly expenses now?" These payout plans give you liquid income without breaking your fixed deposits or withdrawing from your mutual funds. 

5. Helps in Financial Planning for Fixed Monthly Costs

Budgeting becomes easier when you know exactly how much is coming each month. These post-retirement income options help map your monthly inflow so you can plan out rent, SIPs, insurance premiums, or even small treats without overthinking. It turns irregular income into something more predictable.

Plan Your Post-Retirement Income with RenewBuy

Planning for a steady income after retirement doesn't have to feel overwhelming. With RenewBuy, you can access various monthly income plans from trusted insurers. You can easily compare features, understand how each plan works, and select the one that fits your comfort and future lifestyle. With expert help just a click away, RenewBuy brings together the information and support you need to make thoughtful choices for your retirement years.

Disclaimer: The content published in this article is intended solely for the readers' informational purposes and should not be relied upon for personal, medical, legal, or financial decisions. It is advisable to seek advice from a qualified professional regarding specific concerns. The details provided regarding the plan are for reference purposes only. Please visit the insurer’s website for the latest updates on the plan. The company does not guarantee suitability, reliability, timeliness, or accuracy of the information, services, or any other aspects mentioned in this regard for any purpose. We do not endorse any insurance company or insurance product provided by any insurer.