Here is how you can arrange a pension of Rs 50,000 per month for yourself by investing in the National Pension Scheme or NPS.
New Delhi: They say you should start saving money for retirement as soon as you start earning. The sooner you start, the more money you will be able to get till retirement. There are many investment options available to you for accumulating retirement funds like EPF, NPS, stock market, mutual funds, real estate etc.
Among all these, the New Pension System or NPS is one such option that is safe and gives good returns. We are going to tell you how you can arrange a pension of Rs 50,000 per month for yourself through this investment.
Suppose you are 30 years old now and you invest Rs 10,000 every month in NPS. Till retirement i.e. after 30 years when you will be 60 years old, you will have a lumpsum amount of over Rs 1 crore in your hands and you will receive Rs 52,000 pension every month. That is, your old age will pass without any tension and you will not be dependent on anyone.
Investing in NPS
- Your age: 30 years
- Retirement age: 60 years
- Money invested in NPS every month: Rs 10,000
- Annuity period: 20 years
- Investment in annuity plan: 40 years
- Estimated return on annuity: 6%
NPS is guaranteed by the government, that is, you get an annual return of 9 to 12 percent. On maturity, you have to invest 40 percent in an annuity scheme so that you can get a regular pension, the return of annuity is also close to 6 percent. Now with the help of NPS calculator, here is how much amount you will get after 30 years.
- Lumpsum amount: Rs 1.10 crore
- Pension: Rs 52,857 per month
It may be noted that all these calculations are approximate, figures and returns may vary. If you want to increase or decrease your monthly pension, then you have to increase or decrease the investment in NPS accordingly. The total wealth and pension from NPS depends on several factors, such as your age, and the performance of the equity market. Anyone between 18 years to 65 years can invest in NPS.
Tax benefits in NPS
Through NPS, you can save tax up to Rs 2 lakh annually. Under Section 80C of Income Tax, you can save tax up to a maximum of Rs 1.5 lakh, but there is an additional tax exemption of Rs 50,000 if you invest in NPS.
There are two types of NPS, NPS Tier 1, and NPS Tier 2. The minimum investment in Tier-1 is Rs 500 while in Tier-2 it is Rs 1000. However, there is no maximum investment limit in this. There are three investment options available in NPS. In which the investor has to choose where his money will be invested. Equity, Corporate Debt and Government Bonds. With more exposure to equities, it also gives higher returns. Keep in mind that you should do any investment only after talking to your investment advisor.
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