Senior Citizen Saving Scheme Advantages And Disadvantages

People say money isn’t everything in life, which is true to some extent, but money is what you’d need in your golden years to enjoy your post-retirement time and live freely without worrying about your financial situation. That is exactly what the Senior Citizen Saving Scheme (SCSS) has to offer in India. It is actually a government-backed scheme introduced for individuals over the age of 60. As you may know many advantages of SCSS like the security of the principal amount invested and protection against market fluctuations. But what about the other side of the coin? Well yeah, as with anything else in life, there is sure the flip side to this government scheme too. And if you don’t know anything about that yet, don’t you worry now because we are here for just that. Here we will be going over the possible advantages and disadvantages of the Senior Citizen Saving Scheme to give you a well-rounded perspective on things. Here we go.

Advantages Of the Senior Citizen Saving Scheme

Senior Citizen Saving Scheme

Like always, let’s first start off this post with the possible and most prominent advantages of SCSS. Since there is a lot to talk about, let’s get down to it without further ado. Shall we?

1. Save On Taxes

One big plus of the Senior Citizen Saving Scheme (SCSS) is the tax breaks it gives. Put simply, when you put money into SCSS, you’re not only planning for your older years but also cleverly cutting down on the tax you pay now. The Income Tax Act’s section 80C lets you get tax deductions for investments up to Rs 1.5 lakh in SCSS. This is really helpful for older folks who usually have a set income. In other words, more of the money you earn stays with you.

2. Your Money’s Safe

When you put your money somewhere, you want to know it’s safe. And that’s what SCSS does. It’s backed by the government, so it’s really secure. The chances of losing your money? Almost zero. This is super important for older people. They can sleep easily knowing their money’s in a safe place.

3. Take Out Money If Needed

Life can surprise us, even after we retire. Sometimes, unexpected costs come up. With SCSS, if you need your money quickly, you can get it after the first year. But remember, there might be some costs for taking it out early. This means you’re ready for the future, but you can also handle things right now.

4. Move It Easily

Retirement might be when you decide to move somewhere new. Maybe near family or just a new place you like. With SCSS, moving doesn’t mean trouble with your money. You can shift your SCSS account to any approved bank or post office in India. So, wherever you go, your money’s with you, easy to get to.

5. Regular Money Coming In

When you retire, one big worry is having regular money for daily life. SCSS has an answer for that. It pays interest every three months. This steady money helps in planning and budgeting. So, retired folks can live the way they want without money worries.

6. Good Interest Rates

We all want our money to grow fast. Compared to many usual saving options, SCSS often has a better interest rate. This means your money isn’t just sitting safely; it’s growing too. So, you get more back, making your financial future even better.

7. Keep It Going

The good things with SCSS don’t stop after 5 years. If you want, you can keep your investment going for another 3 years. So, if your money plans change, SCSS is flexible enough to change with you.

Disadvantages Of the Senior Citizen Saving Scheme

When you think about where to put your money, it’s good to know all sides of the story. SCSS is a way for older folks to save money. It has some good points, but there are also things to watch out for. Let’s talk about some of these concerns:

1. Taxes and the Money You Earn

Think about it this way: you put money into SCSS, and it earns some extra (we call this ‘interest’). But sometimes, the government takes a bit of that extra money as tax. If in one year you earn more than Rs 50,000 as interest, the government will take some of it straight away. This is called TDS. If you pay a lot of taxes already, this can take away a good amount from you. Also, remember, all the interest you earn from SCSS is taxed. So, in the end, you might get less than you thought.

2. Interest Rate Doesn’t Change

Money matters change all the time. Sometimes, banks offer more interest, sometimes less. But once you put your money in SCSS, the interest you get stays the same. This is good because you know what you’ll get. But it’s bad if other places start giving more interest later. You might feel you missed out.

3. Money Left Behind

Every three months, SCSS gives you some interest. But what if you don’t take it out? Well, it just sits there. Unlike other places, this left-behind money doesn’t grow anymore. So, it’s like having a plant that doesn’t get water. You need to remember to take out your interest regularly.

4. Who Can Use SCSS?

SCSS is for older people, mostly those over 60. There are a few exceptions, like if you retire early or if you worked in defense. But most younger people can’t use SCSS. This age limit might not work for everyone.

5. Can’t Easily Take Out Money

When you put money in SCSS, you promise to keep it there for 5 years. If you try to take it out before, you lose some money as a penalty. This is a problem if you suddenly need your money.

6. How Much Can You Invest?

There’s a rule about how much money you can put into SCSS, and that limit is Rs 30 lakh. This might be a problem for people who want to invest more or spread their money in different places.

7. No Extra Growth on Interest

There’s a magic thing in money called ‘compound interest’. It’s when your interest earns its own interest. But SCSS doesn’t have this magic. Because they give you interest every three months, it doesn’t grow more. If you like the idea of your money making more money, this might disappoint you.


There you have it. Now you are well equipped with the information regarding the Senior Citizen Saving Scheme, and that’s why you can form a conclusion on your own. However, in our opinion, it is a really good scheme if you think about it, but despite that, there are certainly some drawbacks too, which can be a turn-off for many.


Sumit Kumar Yadav has experience analyzing business and finance of big to small companies. Loan, Insurance, Investment data analysis are his key areas.