NPS calculator: Building a retirement fund will not be sufficient if it isn’t managed correctly. To fend for itself post-retirement, an incomes particular person must spend money on such a method the place it could be capable of create each common revenue and a contingency fund for monetary or medical emergency. National Pension System (NPS) is an funding software that addresses each necessities of a senior citizen. In NPS scheme, the investor is certain to purchase annuity price at the least 40 per cent of the maturity quantity whereas most 60 per cent will be withdrawn. However, as per tax and funding consultants, if an investor manages one’s NPS account correctly, it could be capable of get ample quantity for normal bills and a lump sum contingency fund.
Speaking on the NPS scheme; SEBI registered tax and funding professional Jitendra Solanki stated, “In NPS scheme, the account holder can choose debt and equity exposure in single investment. One can choose up to 75 per cent equity exposure and at the time of maturity, the NPS account holder will have to buy annuity worth at least 40 per cent of the maturity amount.” However, Solanki suggested to maintain a steadiness between lump sum withdrawal and pension citing, “This scheme is a pension scheme and hence one needs to keep its focus on the pension amount that would be enough to meet one’s regular expenses post-retirement. So, one should buy annuity to an extent, which is enough to get a monthly pension that can meet the liquidity requirements post-retirement.”
Echoing with Jitendra Solanki’s views; Kartik Jhaveri, Director — Investments at Transcend Capital stated, “One needs to keep a balance in equity and debt exposure too. Since, NPS is a long-term investment; one should have at least 60 per cent exposure in equity and 40 per cent exposure in debt. Equity will give at least 12 per cent return in long-term while debt will give at least 8 per cent annual return on one’s investment. This 60:40 equity:debt exposure will enable NPS account holder to get at least 10 per cent return on one’s money in long-term.”
On how a lot annual return one can anticipate on annuity, each consultants stated that round 6 per cent annual return will be anticipated from annuity. They stated that one can declare revenue tax exemption on as much as ₹2 lakh funding in NPS account in a single monetary 12 months however one can make investments greater than ₹2 lakh in a single’s NPS account in a fiscal 12 months.
View Full PictureSource: NPS Trust
So, assuming 10 per cent annual NPS return and 6 per cent annual return on annuity, if an investor invests ₹17,000 monthly in a single’s NPS account for 30 years and buys annuity price 65 per cent of the maturity quantity, the NPS calculator means that the investor will get ₹1,25,933 month-to-month pension and ₹1,35,61,986 lump sum quantity after turning 60 years previous.
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