Earn ₹30,000 Monthly Pension: Your Guide to NPS?

Answer 1

Planning for a comfortable retirement is essential to maintaining your standard of living after you stop earning. With inflation rising each year, solely depending on savings may not be enough. That is where a gov pension scheme like NPS helps. It allows you to systematically invest during your working years and receive a part of your corpus as a pension every month post-retirement.

Read below to find out how retired individuals can receive a Rs 30,000 monthly pension under the National Pension Scheme.

Estimated Contribution Required To Benefit From National Pension Scheme

Let's calculate the approximate monthly contribution needed to achieve a Rs. 30,000 pension through NPS:

Start investing at age 21 and continue until retirement at age 60 (a contribution period of 39 years).

Contribute Rs. 2,650 every month.

Assume an annual return of 10% on investments.

Exit at 60 years, with 60% of the corpus as a lump sum and the remaining 40% as a pension

By investing Rs. 2,650 monthly for 39 years at an expected return of 10%, one would accumulate a total corpus of around Rs. 1.52 crore by 60 years of age.

On exiting NPS, 60% of Rs. 1.52 crore (Rs. 91.59 lakh) can be withdrawn as a lump sum, and the rest 40% (also Rs. 91.59 lakh) will be used to purchase an annuity, which will provide a monthly pension.

Assuming a conservative annuity return of 6%, this would generate a lifetime monthly pension of Rs. 30,533, which is close to the target of the target of Rs. 30,000.

Benefits Of Investing Through NPS

Some key advantages of accumulating your retirement corpus through NPS are:

Low Cost: NPS has relatively low fund management charges. Most of the assets are actively managed in-house.

Tax Benefits: You can claim a tax deduction of up to Rs. 50,000 under Section 80C on your annual contributions. Partial withdrawal at retirement also enjoys tax exemption.

Government Support: For Central Government employees this gov pension scheme gives an additional yearly contribution of 14% of pay by the employer.

Professional Management: Your money is managed by professional fund managers offering pre-defined investment schemes matching your risk profile and goals.

Lifetime Pension: The NPS guarantees you a regular pension for life post-retirement, ensuring financial security even in old age.

Conclusion

Overall, through disciplined investments in NPS, one can easily achieve the target of Rs. 30,000 in regular monthly income to support retirement. It is one of the most tax-efficient instruments, providing both accumulation and post-retirement financial security.