National Pension System Calculator: From the age of 25, one can contribute just Rs 5000 per month to receive a pension of more than Rs 1.6 lakh.
A Rs 1 lakh/month pension may be adequate for some people right now, but due to inflation, the same sum may not be sufficient for a happy post-retirement life in 20 to 25 years.
To maintain the same standard of living that a retired person can currently maintain for merely Rs 1 lakh, assuming the average yearly inflation rate is 6%, you will need more than Rs 3.2 lakh/month. For the same quality of life after 25 years, you will require more than Rs 4.2 lakh, and after 30 years, you will need more than Rs 5.7 lakh.
It is obvious that as you become older, the expense of living will keep rising due to inflation. As a result, it becomes crucial to develop a sound retirement strategy early on in your employment while consulting a financial counsellor.
It is always preferable to begin retirement/pension investing as early as possible, ideally in your 20s. Your retirement corpus or pension wealth would grow faster if you start earlier. The National Pension System (NPS) is another option for you to start saving for your retirement.
One of the most well-liked investing options for retirement planning is government-backed NPS. It's interesting to note that according to the NPS calculator on the official NPS Trust website, starting at age 25, a monthly commitment of Rs 5000 to the NPS Tier-1 account may produce a pension of more than Rs 1.6 lakh.
There are several assumptions, though:
* You begin investing at age 25 and keep doing so until you are 60 years old.
* A 12% return on your investment is anticipated. The calculator estimates that you will be able to receive a monthly pension of more than Rs 57,000 if the anticipated return falls to 8%.
* A 6% annuity rate is anticipated
* You buy an annuity for the full amount of retirement income that will be generated over the next 35 years.
It's interesting to note that if you start investing Rs 10,000 per month at the age of 25 if the other requirements listed above remain the same, you might receive a pension of Rs 3.2 lakh. For a larger retirement fund, you can raise your contribution during the investment process.
According to NPS regulations, a subscriber may acquire an annuity equal to up to 100% of his total pension asset when he reaches the age of 60.
The final NPS return will also be influenced by the pension fund you choose and how they perform over the length of your investment journey. Many NPS funds have so far returned up to 12%. However, future profits cannot be assured to be as high.
Anyone can open an NPS account.
The programme is open to all Indian citizens, including those who do not reside here.
According to Ajit Kumar, Chief Strategy Officer at KFintech, “Any class of individuals (who fall under the citizen model), irrespective of whether these individuals are Indian and non-Indian residents in the age bracket of 18-60 years, working under the state or central Government or any private firm is eligible to be NPS subscribers."
(Disclaimer: This content is provided merely for informational purposes. Market risk is present for investments made through NPS. To get the most out of your NPS investment, please seek the advice of a qualified retirement counsellor.)
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