Assuming someone starts investing Rs 5,000 per month in NPS at the age of 20 until retirement or let’s say until he reaches the age of 60, the NPS calculator suggests that one would get around Rs 1.91 crore of lump sum at maturity and Rs 1.27 crore of annuity value which will be reinvested in an annuity for a monthly pension. So, assuming an annual return of 6% on an annuity value of Rs 1.27 crore, one would get a monthly pension of Rs 63,768.
There is another option for investors – they can invest a lump sum in the SWP (Systematic Withdrawal Plan) to improve their monthly income. Like SIP where an investor invests monthly, SWP allows an investor to utilize their wealth with ease of monthly withdrawal. By opting for the SWP, one would be able to withdraw that money for a longer period expecting a return of at least 8%.
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So, if you are a 20-year-old NPS account holder and invest Rs 5,000 per month for 40 years, in addition to putting a lump sum at maturity of Rs 1.91 crore in SWP, you will be able to get more than Rs 2 lakh per month. pension (Rs 1.43 lakh per month from the SWP and Rs 63,768 per month from the annuity). However, it should be noted that the monthly income of Rs 63,768 from the annuity will continue until the investor is alive, while Rs 1.43 lakh of SWP only lasts for 25 years.