National Pension System: If you are thinking of early retirement, then you should start planning for it very early. National Pension System is one such option, through which you can start investing early and arrange for a large retirement fund as well as monthly pension.
National Pension System: If you are thinking of early retirement, then you should start planning for it very early. National Pension System is one such option, through which you can start investing early and arrange for a large retirement fund as well as monthly pension. Even if you are 25 years old, you can plan a lump sum fund of Rs 1 crore and a monthly pension of about Rs 33,000 by investing in NPS. You can plan all this according to retirement at the age of 45. Let’s understand how?
How to plan for it
If the investor is 25 years old and he starts investing in this scheme and he does it regularly for the next 20 years. If he has set a target of Rs 1 crore lump sum retirement fund and more than Rs 30,000 monthly pension, then he will have to make a monthly contribution of Rs 22,000.
- Monthly investment in NPS: Rs 22,000
- Total contribution in 20 years: Rs 52.80 lakh
- Estimated return on investment: 10%
- Total amount on maturity: Rs 1.68 crore
- Annuity purchase: 40%
- Estimated annuity rate: 6%
- Lump sum fund on retirement: Rs 1.01 crore
- Pension at the age of 60: Rs 33,691 per month
NPS: Pension is obtained from annuity amount
If you take 40 percent annuity in NPS (it is necessary to keep this minimum amount) and the annuity rate is 6 percent per annum, then after retirement you will get Rs 1.01 crore as lump sum and Rs 67.38 lakh will go into annuity. Now, from this annuity amount, you will get a pension of more than Rs 33 thousand every month. The higher the annuity amount you keep, the higher the pension you will get.
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