The National Pension System (NPS) is one of the best options for retirement planning. By investing small amounts in this scheme, you can accumulate a total of ₹5 crore by the time you retire, allowing you to receive a pension of ₹2.5 lakh per month.
It may sound surprising, but it’s true. Let’s explore this investment strategy in detail. The NPS enables you to achieve financial security in retirement if you start investing early.
To reach the goal of ₹ five crore by retirement, it’s advisable to begin investing by 25. If you invest just ₹442 per day, which amounts to ₹13,260 per month, you can comfortably reach this goal by turning 60.
By investing ₹442 daily over 35 years and assuming an average annual return of 10%, you will accumulate approximately ₹5.12 crore by age 60. Out of the total amount, your contributions will be about ₹56.70 lakh, while the interest earned will be around ₹4.55 crore.
You can withdraw 60% of the accumulated amount upon retirement, which is three crore rupees. The remaining two crore rupees can be invested in an annuity plan, providing you with a monthly income for the rest of your life.
It’s important to note that NPS matures only when you turn 60; early withdrawal is not permitted. However, you can withdraw some of your funds in emergencies, such as medical expenses, house construction, or your children’s education. This flexibility allows you to manage unexpected financial needs without compromising your retirement savings.
If you invest the entire corpus of ₹5.12 crore in an annuity plan, you can expect an annual interest rate of 5-6%. This will yield a yearly income of approximately ₹25.60 lakh to ₹30.72 lakh, or about ₹2.13 lakh to ₹2.56 lakh per month. Imagine the peace of mind that a steady monthly income like this can bring in your retirement years.