NPS Retirement Planning: How to get Rs 1 lakh monthly pension by investing just Rs 1,000 a month; know calculations

Rs 1 lakh pension per month, NPS Retirement Planning: How to get a 1 lakh pension per month in India through NPS? To achieve financial freedom in post-retirement life, one must invest in a retirement plan that can give you a regular income once you reach retirement age. 

Regulated by the Pension Fund Regulatory and Development Authority, the National Pension System (NPS) is a voluntary specified contribution pension scheme in the country.

The National Pension Scheme (NPS) is one of the most effective tools in the country to meet that requirement. NPS gives you the luxury of having a lump sum at retirement age and a regular monthly income afterward. 

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

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NPS: How to get Rs 1 lakh as pension per month?

If you start investing Rs 3,475 per month in NPS at the age of 18 and invest for the next 47 years, you will end up generating a pension of over Rs 1,00,000 per month by the retirement age of 65 years.

NPS: Here's the calculation:

Age: 18 years

Retirement age: 65

Contribution: Rs 1,000/month

Expected Return: 12%

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The individual will end up with a total corpus of Rs 2,75,41,429.

If you take out the lumpsum of 37 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 63 per cent.

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

The amount invested in the annuity will be Rs 1,01,90,329.

Expected monthly pension: Rs 1,01,215 per month

Image: NPS

(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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