NPS: How Rs 5,000 monthly contribution may take your retirement corpus from Rs 1.92 crore to Rs 8.74 crore if you delay NPS exit by 15 years
Retirement Planning: National Pension System is a retirement scheme where an employee, self-employed, or individual can make lump sum or monthly contributions. The starting age to contribute to NPS is 18 years. One can contribute till the age of 75 years. At 60 years of age, one has the option to withdraw their retirement corpus. They can withdraw up to a maximum 60 per cent corpus. With the rest of the 40 per cent amount, the NPS subscriber needs to purchase annuity. The annuity purchase helps them get monthly pension. But if they want, they can postpone their withdrawal and continue to NPS till 75. NPS investments provide compounding, so the longer your investment is, the more your retirement corpus can be. Here, through projections, we will see how if you stay for 15 years more in NPS, with just Rs 5,000 monthly contribution, your retirement corpus can jump by Rs 6,82,02,420.
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NPS investment conditions
We are taking the example of a Rs 5,000 investment from the age of 25 years. We are expecting 10 per cent annual growth your NPS investments. At ages 60, 65, 70, and 75, we will show the estimated retirement corpus amount and the monthly pension you can draw. For the pension purpose, we are expecting a 6 per cent return from your annuity amount.
NPS retirement corpus if you withdraw at 60
As per NPS calculator, if you are investing Rs 5,000 a month from the age of 25 till 60, your investment horizon will be 35 years. At 10 per cent annual growth, the estimated retirement corpus at 60 will be Rs 1,91,41,384, of which Rs 21,00,000 will be your investment, and Rs 1,70,41,384 will be estimated gains.
NPS retirement corpus if you withdraw at 60
If you withdraw a 40 per cent amount from your corpus, the projected monthly pension that you would get will be Rs 38,283.
NPS retirement corpus if you withdraw at 65
If you continue your Rs 5,000 monthly investment for 5 years, your total investment will be Rs 24,00,000, but your estimated retirement corpus will increase to 3,18,83,902.
NPS retirement corpus if you withdraw at 65
If you purchase annuity from a 40 per cent amount, it can give you an estimated monthly pension of Rs 63,768.
NPS retirement corpus if you withdraw at 70
On staying for 5 years more, your investment will be Rs 27,00,000, but your retirement corpus will increase to Rs 5,28,49,280.
NPS retirement corpus if you withdraw at 70
If you purchase annuity with 40 per cent amount, the estimated monthly income will be Rs 1,05,699.
NPS retirement corpus if you withdraw at 75
If you utilise the full tenure limit of NPS and keep investing Rs 5,000 monthly, your investment by 75 will be Rs 30,00,000, but your estimated retirement corpus will be Rs 8,73,43,804.
NPS retirement corpus if you withdraw at 75
The 40 per cent annuity purchase will give an estimated monthly pension of Rs 1,74,688.
How much extra corpus you made from 60 to 75
So, we see that from the age of 60 to 75, your investment is Rs 9 lakh, but your estimated retirement corpus will increase by Rs 6,82,02,420.