Senior Citizens Can Receive 50,000 Pension at 40, Here’s What You Need to Contribute
After retirement, life can be challenging, especially for private sector employees who don’t have a steady income stream. That’s why it’s essential to plan for retirement in advance. If you’re running behind schedule, don’t worry! Start planning now for a comfortable old age. The National Pension System (NPS) is a government scheme that can help.
How NPS Works
NPS is a market-linked scheme, meaning its returns are based on market performance. It’s popular for retirement planning because it provides both a lump sum and a pension. Anyone between 18 and 70 years old can contribute to NPS. Your contributions are divided into two parts:
1. 60% of the total corpus is given as a lump sum after retirement.
2. 40% goes into an annuity, which funds your pension.
The Pension Fund Regulatory and Development Authority (PFRDA) manages NPS.
Investing in NPS at 40: How Much is Needed for a Rs 50,000 Pension?
If you start investing in NPS at 40 and aim for a Rs 50,000 pension after retirement, you’ll need to invest significantly. Here’s a breakdown:
- Monthly investment: Rs 15,000
- Investment period: 25 years (until age 65)
- Total investment: Rs 45,00,000
- Assuming a 10% interest rate, you’ll earn Rs 1,55,68,356 in interest.
- Total corpus: Rs 2,00,68,356
- Lump sum: 60% of Rs 2,00,68,356 = Rs 1,20,41,013
- Annuity investment: 40% of Rs 2,00,68,356 = Rs 80,27,342
Assuming an 8% return on annuity investment, your monthly pension would be Rs 53,516.
Key Benefits of NPS
- Provides both a lump sum and a pension
- Market-linked returns
- Flexible investment options
- Tax benefits
