NPS Calculation: If you invest ₹ 5000 in NPS every month, then how much pension will you get on retirement..

Retirement is a time when regular income stops and expenses continue. In such a situation, if you do not plan, then there may be financial difficulties in old age. The best way to plan for retirement is the National Pension System (NPS). If you start depositing a small amount in it from now, then after retirement, you will keep getting a pension every month.

Suppose you are 30 years old now, and you start putting Rs 5000 every month in NPS. According to this, your annual investment will be Rs 60,000. If you continue this investment for 30 years continuously, then you will have contributed a total of Rs 18 lakh. But see the magic of compounding, by retirement, your fund will grow to more than Rs 1.13 crore. Out of this, about Rs 95.96 lakh will come from interest only. This is the real power of compounding.

Now the question arises, how much pension will you get from such a large corpus on retirement? Let's understand this.

You will have two options for retirement.
When you retire at the age of 60, you will have two options. First, you can invest the entire amount in an annuity plan and start taking a pension every month. Second, if you want, you can withdraw 60 percent of the total corpus and start taking a pension by investing the remaining 40 percent in an annuity. According to the rules, at least 40 percent of the amount in NPS has to be invested in an annuity.

We assume that you have an average annual return of 10 percent on the entire investment. Now let's see how much pension you can get in both options.

Investing only 40% of the amount in an annuity
If you invest only 40% of your total fund of Rs 1.13 crore, i.e., about Rs 45.58 lakh, in annuity, then you will get about 7 to 8 percent interest annually. According to this, your annual pension will be between Rs 3.19 lakh and Rs 3.64 lakh. That is, your pension will be around Rs 26,500 to Rs 30,400 per month.

Investing the entire corpus in an annuity
Now, suppose you think that you need a regular and higher pension, then for this, you can invest the entire Rs 1.13 crore in an annuity plan. If you get 7-8 percent annual interest on this, then your pension will be around Rs 7.97 lakh to Rs 9.11 lakh annually. This means that every month you can get a pension of Rs 66,000 to Rs 76,000 in your account.

How much corpus and pension will be generated on different investments every month?
It can be seen in the table below that if a person invests different amounts in NPS at the age of 30, then how much corpus will he get by retirement (age 60), and how much can be his pension. In this, a 10% average return and a 7.5% annuity rate have been considered. Know from the table how much pension you will get every month.

Monthly investment Total investment in 30 years Corpus on retirement 40% Pension on annuity 100% Pension on annuity
₹5,000 ₹18 lakh ₹1.13 crore ₹26,500–30,400 ₹66,000–76,000
₹10,000 ₹36 lakh ₹2.27 crore ₹53,000–60,800 ₹1.32–1.52 lakh
₹15,000 ₹54 lakh ₹3.41 crore ₹79,000–91,200 ₹1.98–2.28 lakh

Some things to keep in mind
This entire calculation has been done keeping an ideal situation in mind. It assumes that a person has a job at the age of 30 and they immediately start investing in NPS. If a person starts investing at the age of 35 or 40, the corpus will be small, and the pension will also be less. But if you start early, you will have a huge fund by the time of retirement.

The magic of compounding

The biggest strength of NPS is compounding. The sooner you start, the more interest you will earn on your money and the bigger the fund will be. For example, if you start investing at the age of 25, the corpus you will get by retirement will be much more than if you start at the age of 30. This is the reason why experts always say that retirement planning should start as early as possible.

If you want to live a comfortable life even after retirement and do not have any financial problems, then NPS is an excellent option. A small start of just Rs 5000 per month can make your old age secure. If you want, you can even get a bigger pension by investing more money. Remember, being dependent on retirement does not look good on anyone, so start your planning from now.

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