Retirement planning has become more important now than ever. Given the rising inflation, increase in life expectancy and limited social security facilities, retirement planning is no longer an option but a necessity.
If you are in your 30s and want to have a strong retirement corpus at the age of 60, it is important to formulate the right investment strategy from now on.
In this story, we focussed on traditional investment cum retirement savings products like EPF, PPF and NPS to see how much one needs to invest in these instruments to retire with a decent corpus of Rs 5 crore. We spoke to experts and tried to know what strategy should be adopted for investing in these schemes in 2025.
Also read: Forget finance gurus, watch Panchayat: The unexpected money guide we all need
NPS: High returns, but also market risk
According to Ranbir Singh Dhadwal, Group Head – Social Security & Welfare, Protean eGov Technologies Ltd, NPS has a higher equity exposure, so in the last decade, it has given an average annual return of 8% to 12%. On the other hand, the average return of EPF and PPF has been 8–9%.
NPS is also said to be very beneficial in terms of tax benefits, he says, adding “NPS is considered a 3E superpower — Exempt at investment, Exempt on growth, and Exempt at withdrawal — which is not available in any other scheme.” However, this tax system can also change in the future, according to him.
How to reach a Rs 5 crore retirement corpus through EPF, NPS, and PPF
Let’s suppose a 30-year-old individual is earning Rs 1 lakh per month and begins investing in NPS and PPF while also contributing to EPF.
For EPF, a total monthly contribution of Rs 7,835 (including 12% from the employee and 3.67% from the employer) is made on a basic salary of Rs 50,000. With an assumed annual salary increment of 5%, the contribution increases proportionally each year. Over 30 years, this results in an EPF corpus of Rs 2 crore.
Now, assume the individual invests Rs 10,000 per month in an NPS account, which grows to around Rs 1.5 crore over 30 years at an assumed annual return of 8%.
Coming to PPF — a monthly investment of Rs 12,500 (i.e.,
» Read More
