When Does Sukanya Samriddhi Yojana or SSY Mature? How to Maximize Your Daughter’s education and marriage goals with SSY Maturity?
Many parents open SSY accounts for their daughter’s future, but few understand the maturity rules and best ways to use them for their daughter’s education and marriage goals.
In this post, I dwell more on when the SSY will mature and how to wisely and cautiously utilize it for your daughter’s education and marriage goals.
Do you have a daughter who is below 10 years of age? If yes, then you should consider opening a Sukanya Samriddhi Yojana (SSY) for her. SSY is a government-backed savings scheme that offers attractive interest rates, tax benefits, and guaranteed returns (interest rate changes once a quarter). It is one of the best debt investment options for your daughter’s education and marriage expenses.
But do you know when will your SSY account mature and how much will you get at the end? In this article, I will tell you everything you need to know about SSY maturity, such as when it happens, how much you can withdraw, and how to use it wisely.
When Does Sukanya Samriddhi Yojana or SSY Mature?
The SSY account will reach maturity either 21 years after opening or when your daughter gets married after turning 18, whichever comes first. However, you only need to contribute for 15 years. After that, the SSY account will keep earning interest until it matures, even if you don’t make any more deposits.
Assume that your child is at the age of 5. In this situation, you have the opportunity to make contributions for a total of 15 years. This means that until your daughter reaches 20 years old, you can contribute a maximum of Rs.1,50,000 per year. However, once she turns 20, you will no longer have the ability to make any further contributions. However, it’s important to note that the account will reach maturity when she turns 26, which is 21 years after it was initially opened. Alternatively, if she gets married before turning 26 (after 18 years), the account will also reach maturity.
How Much Can You Withdraw from SSY?
You can withdraw the entire balance at the time of maturity. However, if you need money before the maturity period, you can avail of the following option.
Withdrawal of up to a maximum of 50% of the amount in the account at the end of the financial year preceding the year of application for withdrawal will be allowed for the education of the daughter. Also, to be eligible for such withdrawal, your daughter must attain the age of 18 years or have passed the tenth standard, whichever is earlier (Government Notification – Dated 12th December 2019).
It means you can withdraw 50% of the balance for funding her education expenses of 11th standard also. You are allowed to withdraw as one lump sum or in installments, not exceeding one per year, for a maximum of five years.
However, many of us have a misconception that such withdrawal is possible only once the daughter attains the age of 18 years. It is not like that. It is mentioned in the notification that either the daughter attained the age of 18 years or has passed the 10th standard WHICHEVER IS EARLY.
How to Maximize Your Daughter’s Future with SSY Maturity
# Don’t rely on this single product to fund your daughter’s education and marriage goals. SSY should be a debt part of your daughter’s education and marriage goals. You NEED equity to beat the education inflation. Hence, a combination of equity and debt is a MUST.
# If for both goals, you need to fund monthly around Rs.12,500 (or Rs.1,50,000) a year, then don’t put all the money in SSY. It is an illiquid product. Hence ideally it is better to divert around 25% of your debt portfolio towards the debt funds. This will be handy for you when you do the asset allocation rebalancing at the time of equity market fall. Hence, for liquidity purposes, you must invest a small portion into debt funds.
# You noticed that 50% of withdrawal is allowed once she completes her 10th standard. Hence, this can be part of her 11th, 12th, Graduation 1st Year, Graduation 2nd Year, and Graduation 3rd Year expenses. After that, this option seizes as only a maximum of five installments allowed. But by the time your daughter reaches the Graduation 4th year, she may attain the age of 21 years (10th – 16 Yrs, 11th -17 Yrs, 12th – 18th Yrs, Graduation 1st Year – 19th Year, Graduation 2nd Year – 20th Year and Graduation 3rd Year – 21st Year). Hence, funding for the rest of her graduation and post-graduation expenses may be funded from SSY maturity.
# Contributions are allowed only for 15 years. Post that you can’t contribute to the account (even though the maturity is either after 21 years from the date of account opening or at her marriage after 19 years). Hence, you must know well where to fund or invest post this restriction.
# What portion of these educational and marriage expenses years is to be funded from SSY and another portion from your other investments matters a lot. As there are strict rules concerning withdrawal, if you wisely do not plan and heavily rely on SSY, then it may hamper your daughter’s educational and marriage goals.
Conclusion – SSY is a great scheme that can help you save for your daughter’s future and enjoy tax benefits. However, you should not rely on this single product for her future, be aware of the maturity rules and use the maturity amount wisely. You should plan, invest smartly, and save tax to make the most of your SSY maturity.