NPS: Want to boost your retirement corpus from Rs 2 cr to Rs 8.36 cr? This expert strategy can be effective
NPS Retirement Corpus: A delay in the NPS exit can help grow their retirement corpus and annuity amount exponentially. Delaying NPS exit by 15 years, from 60 to 75, can increase the value of their Rs 2 crore corpus by over 4 times.
Retirement Planning: National Pension System (NPS) is a retirement scheme for public as well as private sector employees, where one can invest from the age of 18 years till 75. Even though NPS is a market-linked scheme, it offers investment choices as per one's risk appetite with active and age-based (life cycle based) options. One has the liberty of making contributions as per their convenience either as lump sum or SIP. NPS has Tier I and Tier II accounts. Contributions in a Tier I account provide tax deduction to old tax regime taxpayers of up to 10 per cent of salary (basic+DA) under Section 80 CCD(1) within the overall ceiling of Rs 1.50 lakh under Section 80 CCE.
Not just that, taxpayers can also get tax deduction up to Rs 50,000 under Section 80 CCD(1B) over and above the overall ceiling of Rs 1.50 lakh under Section 80 CCE.
A disciplined investment in NPS helps in accumulating wealth that can help one to meet their retirement goals at age 60 and can offer a steady post retirement income. At that age, an NPS subscriber can withdraw up to 60 per cent lump sum amount from their retirement corpus. With the rest of the 40 per cent amount, they need to purchase annuity, the return from which provides them a monthly pension.
But at that stage, NPS account holders get two more options- they can defer the annuity withdrawal till 63 years of age and lump sum withdrawal till 75 years of age. During that period, they don't need to make any contribution to their retirement corpus, but they will get a return on it. In the second option, they delay their NPS exit till 75 years of age. A delay in the NPS exit can help grow their retirement corpus and annuity amount exponentially. Delaying NPS exit by 15 years, from 60 to 75, can increase the value of their Rs 2 crore corpus by over 4 times. Let's understand it through expert calculations-
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NPS contribution basic conditions
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NPS contribution basic conditions
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NPS: What will happen if you exit at 60?
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NPS: What will happen if you defer annuity by 63 and lump sum by 75
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NPS: What will happen if you defer annuity by 63 and lump sum by 75
![NPS: What will happen if you defer annuity by 63 and lump sum by 75 NPS: What will happen if you defer annuity by 63 and lump sum by 75](https://cdn.zeebiz.com/sites/default/files/2024/08/09/310720-micheile-henderson-lz4npfkcv8-unsplash-1.jpg)
NPS: What will happen if you exit at 70?
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NPS: What will happen if you exit at 70?
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NPS: What will happen if you exit at 75?
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NPS: What will happen if you exit at 75?
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NPS Retirement Corpus Calculation Chart
![NPS Retirement Corpus Calculation Chart NPS Retirement Corpus Calculation Chart](https://cdn.zeebiz.com/sites/default/files/2024/08/09/310725-note-pixabay-take.jpg)
Chart Courtesy: Max Life Pension Fund Management
Scenario | Corpus | Assumed growth at 10% (Rs.) | 60% Withdrawal | 40% corpus to buy an Annuity plan |
(Rs.) | (Rs.) | (Rs.) | ||
Normal Exit (@ 60 years) | 20,00,00,000 | NA | 1,20,00,000 | 80,00,000 |
Annuity deferred till 63, and lump sum deferred till 75 | 20,00,00,000 | 2,66,20,000 | *5,01,26,978 | 1,06,48,000 |
Continue NPS- Exit at 70 | 20,00,00,000 | 5,18,74,849.20 | 3,11,24,909.52 | 2,07,49,939.68 |
Continue NPS- Exit at 75 | 20,00,00,000 | 8,35,44,963.39 | 5,01,26,978.03 | 3,34,17,985.36 |