NPS: Want to take your retirement corpus from Rs 2 crore to Rs 8.76 crore in 15 years? Use this strategy
Retirement Planning: In NPS, at 60 years of age, an NPS subscriber can withdraw up to 60 per cent of their corpus. With the rest of amount, they need to purchase annuity, which helps them get a monthly pension. But if NPS subscribers don't need the retirement corpus at 60, they can continue investing till 75 years of age.
Retirement Planning: National Pension System (NPS) is a retirement scheme where private or public sector employees, self-employed, or individuals can make contributions. They can contribute from the age of 18 to 75. At 60 years of age, they can withdraw up to 60 per cent of their corpus. With the rest of the amount, they need to purchase annuity, which helps them get a monthly pension. But if NPS subscribers don't need the retirement corpus at 60, they can continue investing till 75 years of age. If they want, they can withdraw their amount at any point. In this write-up, we will show you that if you have a retirement corpus of Rs 2 crore at 60 years of age, how after investing Rs 10,000 a month, or Rs 1.20 lakh a year, you can take your retirement corpus to Rs 8.76 crore in 15 years.
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Power of compounding in NPS
Investing in the National Pension System (NPS) for a longer period significantly enhances retirement corpus owing to the power of compounding.
NPS conditions
We assume a Rs 2 crore corpus at 60. From here, the NPS subscriber will make Rs 10,000 contribution a month till 75. We expect investment to grow by 10 per cent every year. We will show the retirement corpus at 65, 70, and 75 years of age.
Retirement corpus at 65 years
If an NPS subscriber has accumulated a corpus of Rs 2 crore and contributes Rs 10,000 every month, a corpus of Rs 3.29 crore is expected at 65 years.
Retirement corpus at 65 years
The contribution in those 5 years will be Rs 6 lakh, and the expected corpus will increase by Rs 1.29 crore.
Retirement corpus at 70 years
This corpus is expected to grow and reach Rs 5.38 crores by age 70.
Retirement corpus at 70 years
At this stage, investment of another Rs 6 lakh will grow the estimated NPS retirement corpus by Rs 2.09 crore.
Retirement corpus at 75 years
Extending the investment period further to age 75 can result in a corpus of Rs 8.75 crores.
Retirement corpus at 75 years
Another Rs 6 lakh investment will help boost the estimated NPS corpus by another Rs 3.37 crore.
| Age | Corpus (Rs.) @ 10% assumed returns |
| 65 | Rs. 3,29,82,489.22 |
| 70 | Rs. 5,38,90,914.12 |
| 75 | Rs. 8,75,64,135.40 |
Chart Courtesy: Max Life Pension Fund Management
How NPS corpus grows faster
This growth vividly demonstrates that additional years of compounding can substantially increase retirement savings, providing greater financial security and more flexibility in post-retirement life. The longer the investment horizon, the more sizeable the retirement corpus.