National Pension System: Everyone plans for retirement, and many people require regular income after retirement. People already invest in various plans to get a steady income. Most people, in particular, put money into pension plans. If you want a generous income after retirement, the National income System (NPS) may be a viable alternative for you.
National Pension System is a government system that is market-linked
The National Pension System is a government system that is market-linked, meaning that its returns are determined by the market. This program is quite popular for retirement planning. This arrangement offers both a pension and a lump sum. If you are 40 years old and start investing in NPS, how much money will you need to put in each month to receive a Rs 50 thousand pension?
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Who can make an investment?
NPS is a plan in which any citizen aged 18 to 70 can invest. Whatever contribution you make to the NPS will be divided in two parts. When you retire, you can take 60% of the cash as a lump payment and the remaining 40% as an annuity. This annuity amount serves as the basis for your pension. The Pension Fund Regulatory and Development Authority (PFRDA) administers this system.
How can I get a monthly income of Rs 50,000?
If you wish to retire at 40 with a monthly pension of Rs 50,000, you can do so by investing in NPM. However, you will need to make a significant investment. At the age of 40, you must invest at least Rs 15,000 every month and continue to do so until you reach the age of 65. This indicates that Rs 15,000 will need to be invested each month for 25 years.
Based on the calculations, you would be investing a total of Rs 45 lakh. If you earn 10 percent interest on this amount, you will receive Rs 1,55,68,356. According to this, a fund of Rs 45,00,000 + 1,55,68,356 = 2,00,68,356 will be established. 60 percent of this money, Rs 1,20,41,013, will be received in one lump sum. The remaining 40%, or Rs 80,27,342, would be paid as an annuity. If we estimate an 8% return on this amount, the monthly pension would be Rs 53,516.
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