NPS: A 35-year old can get Rs 2 lakh as monthly pension by investing Rs 21,000 a month now; how much should you invest in NPS?
The National Pension System (NPS) has emerged as one of the most popular investment vehicles for retirement planning. It offers you the option to invest in different types of asset classes — equity, corporate debt, government bonds and alternative investment funds. Regular investment and a little bit of planning can generate as much as Rs 2 lakh a month from NPS when you retire.
Let's get one thing straight at the beginning: The pension you earn from NPS after retirement will depend on how much corpus you can accumulate. Before you start investing, you need to know the withdrawal rules of NPS. At present, an NPS subscriber cannot withdraw the entire accumulated corpus on maturity. You have to invest at least 40% of the total NPS corpus in an annuity plan from a life insurance company. The annuity amount will get a regular pension after retirement. The remaining 60% can be withdrawn as a lump sum.
To understand how much you need to invest in NPS now to get a monthly pension of Rs 2 lakh, you need to do a back calculation.
How much should you invest now in NPS every month to get a monthly pension of Rs 2 lakh after retirement?
You are 35 and want to start investing in NPS. You have 25 years to accumulate a lump-sum corpus in NPS.
Office Productivity
Advanced Excel Course — Financial Calculations & Excel Made Easy
By — Anirudh Saraf, Founder- Saraf A & Associates, Chartered Accountant
Marketing
Future of Marketing & Branding Masterclass
By — Dr. David Aaker, Professor Emeritus at the Haas School of Business, UC
