Retirement plan: If you want to save so much money that it never ends, then make a retirement plan like this...

Retirement Plan: If you want to save so much money that it never ends, then make many people choose the National Pension System i.e. NPS, in which the money is locked till the age of 60 years. Now the question arises how much money should you invest every month, so that it is enough for your old age? Let us understand how much money you will need at retirement.

First, understand how much money is needed for retirement
How much money you need at the time of retirement may be different for everyone. According to your lifestyle, you have to understand how much money you will need in old age. For this, you will first have to understand your current expenses and then increment them every year keeping the inflation rate in mind. This will tell you how much money you will need at the time of retirement or at a certain age.

Let us assume that the current salary of a 30-year-old person is Rs 50 thousand. In a family of two people i.e. husband and wife, you would be spending around Rs 25 thousand every month, whereas Rs 25 thousand can be left with you. Now, if you proceed with this as a value, then you will invest in NPS for the next 30 years. Let us assume that inflation will increase at the rate of 3-4 percent every year.

According to this, if compounding interest is calculated at Rs 25 thousand at 3% in 30 years, it will come to around Rs 60 thousand. That means you will need a pension of at least Rs 60 thousand per month upon retirement. Keep in mind that this formula is only for those people whose age is 30 years and salary is 50 thousand, out of which 25 thousand is used for their household expenses.

You will need so much money for retirement
There are continuous ups and downs in the interest rates on your savings. Sometimes it becomes 5 percent and now it even reaches 7-8 percent. We assume that at the time of retirement, you will get at least a 5 percent return on your savings. In such a situation, if you want Rs 60 thousand every month, then at the age of 60 you will need a retirement corpus of about Rs 1.5 crore. In such a situation, you will be able to get a pension of around Rs 62,500 every month. Now the question is how much money you will have to deposit every month for this.

Invest Rs 7500 every month
Suppose your age is 30 years, then you will have to invest Rs 7500 every month to accumulate Rs 1.5 crore by the age of 60. We assume that you will get an average interest on investment of 10 percent on this investment. You can easily get 10 percent interest by investing in NPS. If you deposit around Rs 7500 every month in NPS, then in 30 years you will invest a total of Rs 27 lakh.

You will get interest of around Rs 1.43 crore on this. In this way, your total amount on maturity will be around Rs 1.7 crore. In such a situation, you will be able to get a pension of about Rs 70 thousand every month. Keep in mind, if your age is more than 30 years, then increase your investment every month accordingly, so that you can get more money till retirement plan.

Keep these things in mind
Whenever you retire, you will have two options. Or you can invest all your money in an annuity plan and take a pension from it. Or you can withdraw 60 percent of the amount and make an annuity plan with the remaining 40 percent. On retirement, at least 40 percent of NPS has to be invested in an annuity plan. We are assuming that you will invest all the money in an annuity plan on maturity. If you do not want to invest all the money in an annuity, then you can change your calculation accordingly.

Will money never run out this way?
If you invest all the money received from NPS in an annuity plan and spend your expenses only on the interest on it, then you will always have money left. Suppose you are earning interest every month on your corpus of Rs 1.5 crore. In such a situation, your principal amount will always remain the same. However, inflation will continue to rise even in the years after retirement, so to cope with it you will have to either earn some extra income or reduce your expenses. Well, if you are with your children in old age, then your expenses can remain under control to a great extent. It would be best for you to keep yourself busy with some work even in old age, be it blogging, consulting, advising, or any such work, in which you do not have to work the whole day, but earn some money. Keep coming. a retirement plan like this...

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