NPS Calculator

NPS Calculator

After retirement, pension becomes one of the major earning sources for many in India. However, with inflation on the rise, whether the pension you are going to receive will be enough or not, or how much pension will be enough needs analysis. Here the nps calculator comes in which can help in calculating the pension that you can earn every month after your retirement and help in your retirement planning.

This article will cover different aspects of the National Pension System calculator, from its underlying formula to the process you need to follow to use the calculator, the benefits of using this calculator and a lot more. Since retirement planning is one of the crucial parts of the financial planning process, thus this calculator is also one of the integral parts of the process.

How Does the National Pension Scheme Calculator Work?

NPS pension calculator is one of the simplest online calculators, where you need to enter the amount you want to invest in the National Pension System every month, suppose it is Rs. 5000 and now your age is 25 and the return you expect is around 8%. So, the maturity amount (lump sum) that you will receive from this scheme is Rs. 1.15 crores where your investment would be just Rs. 21 lakhs. So, Rs. 94.46 lakh crores would be your gain.

Now you can see how much pension you can earn every month by changing the amount you want to put into the annuity. Suppose, you want to buy an annuity worth 50% of the maturity amount, then your lump sum amount remaining in the NPS account would be Rs. 57.73 lakhs while your monthly pension would be Rs. 28865 approximately.

Now you change the amount you want to invest and check how much you can generate with different investment amounts. Similarly, you can change the expected return from the investment according to the asset class you have chosen for your NPS investment. Also, age matters a lot in generating a higher sum of money. The younger you are, the more money you can generate as you have more years to reach the age of retirement.

Characteristics of the National Pension Scheme Calculator

There are different features of the National Pension Scheme Calculator which include the following –

Investment amount

It is the amount that you want to deposit in the scheme every month or in a year. You can change this amount as many times as you want while using the calculator to check the maturity amount from the scheme. As and when this amount is changed, the total maturity amount will change instantly.

Rate of return

You can select any rate of return that you think your investment will earn from NPS. It should depend on your choice of asset class for NPS investment. You can change the return as well multiple times to check how the maturity amount gets affected by the same and accordingly chose the asset class of NPS investment.

Annuity purchase

You can also use this calculator to figure out how much you should invest in an annuity to generate a certain amount of pension per month after the maturity of the scheme.

Merits of Using the National Scheme Pension Calculator

NPS Calculator India makes the life of NPS account holders and people who are interested to invest in this scheme by –

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  Making the calculation of the maturity amount and the pension per month they can earn

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  Helping them compare the return rates of different underlying assets that they can choose

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  Saves time as manual calculation of NPS maturity amount can be tedious

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  Providing a simple and user-friendly interface which helps everyone even with minimum tech knowledge to use this NPS return calculator

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  You can also use the calculator to check how much you need to invest in the NPS scheme every month to achieve a particular retirement corpus

Ways the National Pension Scheme Can Help You

National Pension System is one of the few government savings and investment schemes that invest in the financial markets and thus, it is one of the best ones for retirement planning. This scheme not only helps in accumulating a huge retirement corpus but also helps you save taxes at present. Yes, under section 80C of the income tax act, you can save up to Rs. 1.5 lakhs invested in this scheme in a financial year. Tier I investors of this scheme can save Rs. 50000 additionally over and above Rs. 1.5 lakhs. This is according to the rule of section 80 CCD (1B) of the same IT Act.

Moreover, this is one such scheme where you can choose the underlying assets of your choice. If you want to take the risk, you can choose equities to be the underlying asset for your NPS scheme, while if you are looking to generate moderate return then you can go for hybrid or debt instruments as the underlying assets.

You can invest in this scheme from the age of 18 which is another benefit. The earlier you start investing, the more corpus you can accumulate till the age of 60 when the scheme will mature.

Another added benefit is that a portion of the maturity amount can be used for annuity purchases which will generate the monthly pension. You can also take the lump sum maturity amount, it is at your discretion how you want to withdraw the retirement corpus from the NPS scheme after maturity.