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NPS Calculator: Are you also worried about your life after retirement? Want that there should be no shortage of money in old age and a fixed amount should come every month? The National Pension System (NPS) can be a great plan for you. Let's see how you can arrange a big fund and regular pension on retirement by investing a little at a young age.

The tension of retirement?

National Pension System (NPS) is a retirement saving scheme of the Government of India. Its purpose is to help people save during their working lives and ensure regular income after retirement. It was started for government employees in January 2004 and opened to all citizens in 2009.

Planning from the age of 21, luxury at 60!

Suppose you are 21 years old and you decide the age of retirement to be 60 years. You start investing ₹ 4,500 every month in NPS. You will have to make this investment continuously for 39 years.

Age to start investment: 21 years

Retirement age: 60 years

Monthly investment: ₹4,500

How much will be the total investment?

If you invest ₹4,500 every month, then:

Annual investment: ₹4,500 x 12 = ₹54,000

Total investment in 39 years: ₹54,000 x 39 = ₹21,06,000 (twenty one lakh six thousand rupees)

This will be the total amount that will go out of your pocket.

How many funds will be created? (Estimated)

In NPS, your money is invested in equity, corporate bonds, and government securities by various fund managers. If we assume an average return of 10% per annum (this depends on the market performance and is not guaranteed), then the estimated total corpus at the age of 60: approximately ₹2.59 crores (two crores fifty-nine lakh rupees), is the power of compounding.

You will get ₹1.56 crores in lump sum on retirement!

As per the rules of NPS, at the age of 60, you can withdraw a maximum of 60% of the total deposit amount in a lump sum, which is tax-free. 60% of the total corpus: 60% of ₹2.59 crores = approximately ₹1.56 crores. You will get this amount in a lump sum on retirement.

Pension of ₹51,848 every month!
The remaining 40% amount (₹2.59 crores - ₹1.56 crores = ₹1.03 crores, which has been calculated as close to ₹1.04 crores) must be invested in buying an annuity. This annuity is how you get a regular pension.

The amount for annuity: Approximately ₹1.04 crores

Estimated annual annuity rate: 6% (this rate may change)

Monthly pension: (₹1,04,00,000 * 6%) / 12 = ₹51,848 (approximately)

If you want, you can invest more than 40% in an annuity, which will increase the pension further.

How to get started? (NPS Account)
Account Type: There are two types of accounts in NPS - Tier-1 (mandatory retirement account) and Tier-2 (voluntary investment account, which can be opened only after Tier-1).
Minimum Investment: To keep the Tier-1 account active, it is necessary to deposit at least ₹1,000 annually.
Investment Age Limit: You can start investing in NPS from the age of 18 to 70 years and continue it till the age of 75 years.
Great tax savings!
Investment in NPS gives you attractive income tax exemptions.
Section 80CCD(1): Up to ₹1.5 lakh (this is included in the limit of 80C).
Section 80CCD(1B): Additional exemption of ₹50,000 (this is over and above the ₹1.5 lakh limit of 80C).
Overall, you can get tax exemption of up to ₹ 2 lakh by investing in NPS. 60% lump sum amount received on maturity is also tax-free.

These benefits are also special!

Portability: You can easily transfer your NPS account when you change jobs or city.

Online access: You can manage your NPS account from anywhere through mobile app or website.

Freedom to choose fund manager and scheme: You can choose the fund manager and investment scheme (active or auto choice) of your choice.

Disclaimer: This content has been sourced and edited from News 18 hindi. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.