To ensure a comfortable post-retirement life, it's crucial to have a steady monthly income. People often invest their lifetime savings in fixed deposits (FDs), but in today's inflationary times and falling interest rates, it's becoming increasingly difficult to sustain a household based solely on interest. If you're looking to invest your gratuity or PF money in a place that provides a fixed income like a pension, consider the State Bank of India's (SBI) Annuity Deposit Scheme.

It could be a game-changer for you. What is the real magic of an annuity scheme?

This SBI scheme is completely different from a regular fixed deposit. While an FD locks your money in for a fixed period and you only receive interest, an annuity scheme divides your principal into installments. The monthly payment consists of two parts: the interest earned on your money and a portion of your principal. This means that by the end of a 5- or 10-year period, your entire deposit is returned to you in installments. This is ideal for those who want a secure monthly income while avoiding stock market risk.

Understand the complete math of investing ₹10 lakh

Suppose Vinay Mishra retired at the age of 58 and received ₹10 lakh as gratuity. He invested this money in SBI's annuity deposit scheme for 5 years (60 months). If we consider the interest rate of approximately 7.25% to 7.50% available for senior citizens, the calculation would be as follows:

• Total Investment: ₹10,00,000
• Tenure: 60 months (5 years)
• Estimated EMI: ₹19,919.36 (approximately ₹20,000)

This way, Vinay will receive approximately ₹20,000 per month, eliminating the stress of his expenses. By the end of five years, he will have received his entire ₹10 lakh loan in installments.

Who will benefit the most from this scheme?

This scheme is a 'panacea' for those who have lump sum money but do not have any regular source of income.

Senior Citizens: Senior citizens receive 0.50% to 1% higher interest rates than regular citizens, which increases their monthly installments. Children's Education: If you want a fixed monthly amount for your child's higher education, you can choose a 5- or 10-year plan. Tax Savings:

Since a large portion of the amount received is your principal, only the interest portion is taxable. 4 key points about the SBI annuity scheme

• Investment Limit: There is no maximum investment limit in this scheme. The minimum investment should be enough to earn you at least ₹1,000 per month.
• Tenor Options: You can deposit money for 3, 5, 7 or 10 years (36, 60, 84 or 120 months) as per your requirement.
• Loan facility: In case of an emergency, you can take a loan up to 75% of your annuity balance. After taking out the loan, your monthly installments are credited to your loan account.
• Nomination and Security: Nomination is available. In the event of the depositor's death, the scheme can be prematurely closed and the entire amount can be transferred to the nominee.

If you want "sure money" every month with a safe investment, this SBI scheme is an excellent option. Before investing, visit your nearest SBI branch to inquire about the latest interest rates, as even small changes in rates can impact your monthly income.

PC:KNN India