Retirement planning is very important and the best instrument for this is NPS. While investing in NPS, people pay attention to how much money they will need when they retire at the age of 60. Here, let us tell you that if you postpone your NPS for 5 years, then the pension you get increases by 60 percent.
There will be 2 options on retirement
When you are 60 years old i.e. when you retire, you will have 2 options. The first is that you exit from NPS. In such a situation, you can withdraw 60 percent of the amount and buy an annuity plan with 40 percent. The second option will be that you keep it invested for some time. In such a situation, you will have to keep investing money for the next 5 years as well. Corpus will increase by 60% in 5 years
If you invest Rs 2500 every month in NPS from the age of 25, then by the age of 60, you will have Rs 1 crore deposited. If you retire at the age of 60, then you can get a pension of about Rs 58 thousand every month at the rate of about 7 percent on Rs 1 crore. On the other hand, if you continue this investment till 65 years, then your total corpus will be about Rs 1.60 crore. That is, your investment will be 60 percent more.
Who should do this?
Those people should pursue their NPS, who want to keep doing something even after retirement. There are many people who even after the age of 60 think that they should work somewhere and should not sit idle. At such a time, if you do not have any responsibility of children’s education or marriage, then you can invest some extra amount. This will increase your corpus and you can get more pension.
There are 3 benefits of NPS while working
Most people believe that by investing money in NPS, pension is guaranteed for old age. But do you know that NPS gives you many benefits even in your youth. Remember, these benefits are given separately along with eliminating the worry of money in old age. So let’s know what benefits you get from NPS in your youth.
Additional tax exemption is available
Tax exemption is available on investment in NPS under section 80CCD of Income Tax. It also has two sub-sections – 80CCD(1) and 80CCD(2). Apart from this, there is another sub-section of 80CCD(1) which is 80CCD(1B). You can get a tax exemption of Rs 1.5 lakh under 80CCD(1) and Rs 50 thousand under 80CCD(1B). Apart from this exemption of Rs 2 lakh under 80CCD(2), you can avail more exemption in income tax. Under this, you can invest up to 10 percent of your basic salary and dearness allowance in NPS, which is done through the employer. If you are a government employee, then this figure can be up to 14 percent for you.
Money will not be spent unnecessarily
When a person gets a job, everyone spends money here and there in the initial days. On the other hand, after a few years, everyone starts understanding that to live a better life in old age, it is necessary to invest in youth itself. Although there are many schemes and tools for investment, but the biggest advantage of NPS is that you can withdraw the money deposited in it only after retirement. Meaning, unlike other schemes, its lock-in period is not 5 years or 15 years, but is up to the age of 60 years. In this way, the investment of the youth remains safe for old age. If the lock-in is less, then many times people use that money to buy a car or house or for any medical emergency, which weakens the security of old age.
Return according to risk
In all the investment schemes, you get fixed returns or you get such returns over which you do not have control. If you invest money in NPS, then you can decide yourself how much money you want to invest in the stock market and how much money in fixed return tools. In youth, there is a capacity to take more risk. In such a situation, you can get more returns by taking more risk, which will help you in accumulating a big corpus in the coming days. With increasing age, when you feel that you have to take less risk, then change the investment in NPS accordingly, which will benefit you.
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