Sitting cross-legged outside the senior citizens counter in the head post office in Mylapore is 63-year-old D.Santhanam, a retired postal department staff. “No transactions are needed as my sons take good care of me,” he says referring to his personal finances. “I like to sit here at times. How long can I keep watching TV at home?” he adds.
Inside the post office, however, there is a lean queue of senior citizens who are there to update their passbooks. In absolute terms, the number of accounts for the postal savings scheme which offers nine per cent interest rate payable every quarter continues to see a steady growth, says M.S.Ramanujan, Postmaster General, Chennai City Region. “But because banks offer a higher interest rate there is some form of migration going from postal savings to the banks based on market fluctuations,” he says.
Investment consultant, Uma Kalyanam, who has several clients who are senior citizens, says postal savings schemes are currently the least preferred option. “Senior citizens are choosing to invest in banks rather than the post office for the simple reason that banks offer a higher interest rate,” she says. “Following this are the fixed deposit ,” she adds. It is very rare that senior citizens opt for riskier options such as mutual funds or invest in the stock market, says another investment consultant, whose majority of clients are senior citizens.
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For the elderly who own property but do not see a steady cash flow, organisations such as the Dignity Foundation, have solutions by way of the reverse mortgage scheme. “Whenever we get a call from a senior citizen who owns property but lacks a regular source of income, we suggest they go in for a reverse mortgage option,” says K. Radhakrishnan, Director, Dignity Foundation. A senior citizen can mortgage his property with a bank or housing finance company, and the institution pays the person a regular payment on a monthly basis, he says.
“We invite bankers to our monthly meetings to talk about this option as it is a very good scheme for those elders who do not want to depend on their children,” says Mr.Radhakrishnan. “The good thing is that the person who reverse-mortgages his property can stay in the house for his life and continue to receive the much needed regular payments,” he adds.
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But this concept has still not caught on amongst Chennaites as many are sceptical about this option, he says. Dignity Foundation has also worked closely with an insurance company to ensure that senior citizens can now be covered till the age of 80.
At the ‘pre-retirement training' for people aged 55 years and above, HelpAge India offers advice on how to invest safely. The organisation also encourages elders who are below the poverty line to form self-help groups for financial security.