Rs 40,000 pension per month: How to get Rs 40,000 as pension every month by investing in NPS? Know the calculation

NPS pensions after retirement, 40000 pension per month: Retirement planning is an important part of financial decision-making. As time passes, inflation also rises, and subsisting only on savings might need to be revised for you after retirement.

To achieve financial freedom in post-retirement life, you must invest in a retirement plan that can give you a regular income once you reach retirement age. The National Pension Scheme (NPS) is one of the most effective tools in the country to meet that requirement. NPS  because it gives you the luxury of having a lump sum at retirement age and a regular monthly income after that. 

Since NPS provides compounding returns, a long investment period will grow your income faster.

For instance, if one starts in the early 20s, they will have a larger time frame to invest, and, therefore, even smaller investments can help them build a sizeable corpus at the time of retirement.

NPS: How to get Rs 40,000 as pension per month?

If you start investing Rs 3,475 per month in NPS at the age of 21 and invest for the next 39 years, you will end up generating a pension of Rs 40,000 per month by the retirement age of 60 years.

NPS: Here's the calculation:

Age: 21 years

Retirement age: 60

Contribution: Rs 3,475/month

Expected Return: 10%

The individual will end up with a total corpus of Rs 2,00,19,029.

If you take out the lumpsum of 60 per cent from that corpus (60 per cent is the maximum limit you can withdraw at retirement age), in that case, you will be left with an annuity of 40 per cent.

The government invests annuities in debt funds or corporate bonds where the invested amount generates a fixed income. If you get a six per cent return on annuity, then-  

The amount invested in the annuity will be Rs 80,07,612.

Expected monthly pension: Rs 40,038

Source: NPS Calculator

(Disclaimer: Investments in NPS are subject to market risks. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

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