National Pension System: With this plan, you would get Rs 2.5 lakh monthly during retirement

 National Pension System: With this plan, you would get Rs 2.5 lakh monthly during retirement

National Pension System: With this plan, you would get Rs 2.5 lakh monthly during retirement

The National Pension System is seen to be the greatest choice for retirement planning since it allows you to save a little bit of money now and get a large amount later in life. If your goal is to retire with a monthly income of Rs 2.5 lakh, tell us how you intend to invest.

You should also be concerned for your retirement if you have a job. Retirement planning is done for this reason, but in order to do so, you must decide how much money is required and where to put it starting now. Additionally, it is important to remember that the earlier you begin investing, the less you will need to contribute each month. The National Pension System (NPS) is among the greatest alternatives for retirement planning; with only a little initial investment, you may get a sizable payout in retirement.

What is the equation?

First and foremost, it's critical to realize that young people who have just begun working may use this technique. Assume you have a job before the age of 25 and want to deposit Rs 5 crore when you retire, which is at age 60. At the age of 25, if you begin setting aside Rs 442 from your pay each day and put it in NPS, you would have Rs 5 crore when you retire.

How is Rs. 5 crore made?

You would need to deposit around Rs 13,260 every month if you save Rs 442 per day. If you begin investing at age 25, you will continue to do so for 35 years, until you reach age 60. You are probably going to get an average interest rate of ten percent if you have put your money in NPS. In this manner, at 60 years old, your money would have compounded to reach Rs 5.12 crore.

In 35 years, if you invest Rs 13,260 every month in NPS, you would have invested a total of Rs 56,70,200. The concern now is, where would the Rs 5 crore come from if the investment is Rs 56.70 lakh? Actually, the power of compounding will make this achievable. This means that each year, in addition to receiving interest on your principle, you will also get interest on the interest that was earned on your principal. In this case, you would earn a total interest of Rs 4.55 crore for a 35-year investment of Rs 56.70 lakh. Your total investment will be Rs 5.12 crore in this manner.

Will we be holding the whole sum in our hands?

Saying that you would have Rs 5.12 crore in your possession when you retire would be incorrect. This is due to the fact that you may only take 60% of the NPS when it matures after 60 years. This implies that you would be required to invest the remaining Rs 2 crore in an annuity plan, leaving you with around Rs 3 crore in withdrawal options. Let us assure you that you will get income for the rest of your life because of this annuity plan.