NPS Calculator: A retirement pension offers a reliable source of income during retirement, when individuals are no longer actively earning or have reduced earnings. For private-sector employees, a retirement pension is a valuable benefit, as it allows them to access programs that ensure a steady income after they retire.
The National Pension System (NPS) is one such option that supports retirement savings. This system promotes financial security by encouraging individuals to save and invest regularly over the long term.
Also Read: Best Senior Citizen Fixed Deposits in November – Check the latest interest rates
To calculate how much a 25-year-old needs to invest for a monthly pension of Rs 2 lakh through the NPS, we will have to consider the following factors:
1. Investment period: 35 years (from age 25 to 60).
2. Expected rate of return: Around 12% per annum during the accumulation phase.
3. Annuity rate: Around 6% at the time of retirement.
4. Annuity purchase: NPS mandates that at least 40% of the corpus be used to purchase an annuity for regular pension.
Example:
If a 25-year old starts contributing Rs 15,500 per month towards the NPS and consistently invest until the age of 60, his retirement savings could grow significantly. Assuming an annual return of 12% on his investments, his accumulated corpus will be substantial by the time you retire. Based on these projections, his monthly pension could be around Rs 2 lakh, providing a steady and reliable income for retirement years.
This calculation works as follows:
You Age: 25 years
Monthly Investment: 15,500
Investment Period: 35 years
Expected Return on Investment: 12%
Percentage of Corpus Allocated for Pension: 40%
Expected Return from Pension: 6%
Total Investment: Rs 65.1 lakh
Returns Earned: Rs 9.42 crore
Maturity Amount: Rs 10.1 cr
Lumpsum Amount (60%) at the age of 60 years: Rs 6.04 cr
Pension Wealth (40%) at the age of 60 years – Rs 4.03 cr
Monthly Pension: Rs 2,01,353
How much a 30-year old person needs to invest for getting a monthly pension of Rs 2 lakh?
You Age: 30 years
Monthly Investment: 28,500
Investment Period: 30 years
Expected Return on Investment: 12%
Percentage of Corpus Allocated for Pension: 40%
Expected Return from Pension: 6%
Total Investment: Rs 1.03 crore
Returns Earned: Rs 9.03 cr
Maturity Amount: Rs 10.1 cr
Lumpsum Amount (60%) at the age of 60 years: Rs 6.04 cr
Pension Wealth (40%) at the age of 60 years – Rs 4.02 cr
Monthly Pension: Rs 2,01,205
Thus,
» Read More
