NPS: Retirement is at 60 and your age has become 40, can you get a 1 lakh rupees pension, along with 1.5 crore funds by investing 20 years in NPS?
National Pension Scheme: Any Indian citizen between 18 to 70 years can open an account under the National Pension Scheme, whether he works in the central government state government, or a private company. NRIs are also eligible for this.
Best Pension Scheme: Suresh, who works in a private company, is going to be 40 years old in January 2025. He retires at the age of 60. Currently his salary is around Rs 1.25 lakh per month. But till now he has not planned anything for retirement, whereas his friends were alert about retirement from an early age and started investing for it. Now Suresh has started worrying about these things that where will the money come from for regular expenses after 20 years.
NPS: Will take away the tension of pension
When Suresh talked to a financial advisor, he came to know that the way inflation is increasing 20 years from now, the expenses will also increase accordingly. Therefore, at least during that time, a regular monthly income of Rs 1 lakh will be required, so that the fund received after retirement is saved and the basic needs can be met. The same financial advisor advised him to invest in the National Pension System i.e. NPS. He told how 20 years is enough to do better planning. He also showed the calculation that how by planning during 20 years, he can arrange for a pension of Rs 1 lakh, along with a fund of at least Rs 1.50 crore.
NPS: What is this pension scheme
National Pension System (NPS) is an investment scheme. This scheme is designed for pension after retirement. It is being regulated by PFRDA or Pension Fund Regulatory and Development Authority under the PFRDA Act 2013. Under NPS, investors' savings are deposited in the pension fund.
Any Indian citizen (government employee or private sector employee) between the age of 18 and 70 years can open an account in NPS. NRIs are also eligible for this. After opening the account, one has to contribute till the age of 60 or till maturity. At least 20 years of investment is necessary in this.
NPS: How to plan at the age of 40
Age to start investing: 40 years
Investment period: 20 years (till the age of 60 years)
Investment in NPS every month: Rs 20,000
Top up investment after every one year: 10%
Your total investment in 20 years: Rs 1,37,46,000
Estimated return on investment: 10% annually
Total corpus: Rs 3,22,90,815 (Rs 3.23 crores)
Total benefit: Rs 1,85,44,815 (Rs 1.85 crores)
Total tax saving: Rs 41,23,800
Now you will have to buy annuity for pension
Investment of pension wealth in annuity plan: 55%
Annuity rate: 8%
Pension wealth: Rs 1,61,45,408 (Rs 1.62 crores) Rs)
Lump Sum Withdrawal Amount: Rs 1,61,45,407 (Rs 1.62 crore)
Monthly Pension: Rs 1,07,636 (around Rs 1 lakh)
By investing with this strategy, you will get a lump sum fund of Rs 1.62 crore when you retire at the age of 60. At the same time, you will start getting a pension of about Rs 1 lakh every month.
(Source: SBI Pension Fund Calculator)
