NPS Calculator- Big news for investors. National Pension System (NPS) is a retirement saving scheme launched by the Government of India. Any citizen above 18 years of age can invest in it. In this scheme, any person can create a big fund by investing small amounts every month. If you invest Rs 5000 every month at the age of 25, then how much money can you raise by the age of 60, let’s know…
Invest Rs 5,000 every month from the age of 25
Suppose a person starts a job at the age of 25 and decides to invest Rs 5,000 every month in an NPS Tier-1 account. He continues this investment continuously for 35 years i.e. till the age of 60. NPS is a market-based product and its average return over the long term has been between 8-10%. Here we are calculating assuming a 10% annual return.
How much money will you get on retirement?
If you do a SIP of Rs 5,000 for 35 years, the total investment amount will be-
5,000 × 12 × 35 = Rs 21 lakh (approx)
But due to compound interest and 10% annual return, this amount will increase to – Rs 1.72 crore (approx) That means by saving just Rs 5,000 per month one can become a crorepati by the age of 60.
How much lump sum and how much pension?
According to NPS rules, it is mandatory to invest 40% of the amount in annuity. The remaining 60% amount can be withdrawn in lump sum. Accordingly, Rs 68.63 lakh (approx.) will go into annuity. The lump sum withdrawal will be Rs 1.03 crore (approx.).
Calculation of Monthly Pension under SPS
Now let us know how much monthly pension will be received by investing Rs 68.63 lakh in annuity.
1. We assume that the annuity will give an average annual return of 6%.
2. Annual pension = Rs 68.63 lakh × 6% = Rs 4.12 lakh
3. Monthly pension = Rs 4.12 lakh ÷ 12 = Rs 34,315 (approx)
This means the investor will get a lifetime pension of approximately Rs 34,315 every month.
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