A Smart Retirement Plan for a Secure Future

Planning for retirement is crucial to ensure financial stability in later years. If your goal is to receive a ₹1 lakh monthly pension post-retirement, the National Pension Scheme (NPS) could be an ideal option for you. With systematic investments and a long-term approach, you can accumulate a significant retirement corpus while also enjoying tax benefits.

Let’s understand how the NPS scheme works and how you can achieve a pension of ₹1 lakh per month.

🔹 What is NPS?

The National Pension System (NPS) is a government-backed retirement savings scheme regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It is a voluntary, long-term investment plan designed to provide financial security after retirement.

✅ Key Features of NPS:

• Portable Account: Operable from anywhere in India.
• Tiered Structure: Includes Tier 1 (mandatory for pension benefits) and Tier 2 (voluntary savings account).
• Equity Exposure: Provides market-linked returns with investment exposure to equity, corporate bonds, and government securities.

🔹 NPS Withdrawal Rules

Upon retirement at 60 years of age:

• 60% of the total corpus can be withdrawn as a lump sum.
• 40% of the corpus must be invested in an annuity plan, ensuring a regular monthly pension.

✅ New NPS Guidelines: If the total corpus is ₹5 lakh or less, the entire amount can be withdrawn without purchasing an annuity, and this amount is tax-free.

🔹 When Should You Start Investing in NPS?

• The earlier you start, the greater your equity exposure and overall returns.
• Private-sector employees up to the age of 35 years can have up to 75% exposure in equity.
• This percentage gradually reduces to 50% by the age of 60, ensuring stable returns as retirement nears.

🔹 How to Get ₹1 Lakh Monthly Pension from NPS?

Example Calculation for a 40-Year-Old Investor

📌 Investment Plan:

• Start investing ₹20,000 per month in NPS.
• Increase the investment by 10% every year.
• Estimated return: 10% annually.
• Investment period: 20 years (until retirement at 60).

📌 Final Corpus at Retirement:

• Total Investment: ₹1.37 crore
• Total Returns: ₹1.85 crore
• Final Corpus: ₹3.23 crore
• Tax Savings Over Investment Period: ₹41.23 lakh

📌 Post-Retirement Annuity Calculation:

• 55% of the corpus invested in an annuity plan.
• Annuity rate: 8%.
• Pension Wealth for Annuity: ₹1.62 crore.
• Lump Sum Withdrawal Amount: ₹1.62 crore.
• Estimated Monthly Pension: ₹1,00,000.

✅ Result: By following this investment plan, you will receive a ₹1 lakh monthly pension along with a lump sum of ₹1.62 crore at retirement.

🔹 Why Choose NPS for Retirement Planning?

✔ High Market Returns: Exposure to equity ensures better growth than traditional savings.
✔ Tax Benefits: Up to ₹2 lakh tax deductions under Section 80C and 80CCD(1B).
✔ Regular Income After Retirement: Ensures a stable monthly pension.
✔ Government-Backed Security: Safe and reliable investment.

🔹 Final Thoughts

The National Pension Scheme (NPS) is an excellent retirement savings tool for individuals looking to secure their financial future. By starting early and increasing contributions gradually, you can build a substantial corpus and enjoy a comfortable retirement with a ₹1 lakh pension per month.

Would you like personalized NPS calculations based on your current age and investment capacity? Let me know! 🏦📊