NPS Calculator Online
NPS, or National Pension System, is a measure to introduce financial stability for Indian citizens after they have retired. It was previously called the National Pension Scheme. Anyone over 60 can use the amount gathered in the pension corpus. You will need an NPS calculator to determine the total accumulation amount.
What is NPS?
National Pension System is a defined contribution scheme. It allows the National Pension System (NPS) subscriber to contribute periodically to their NPS account throughout their work. The accumulated funds can later have used to purchase an annuity. The scheme had designed as a sustainable financial solution to provide suitable retirement income to Indian citizens.
What is an NPS calculator?
The National Pension System (NPS) calculator allows you to compute the monthly payment and lumpsum amount they can expect after retirement. The calculation had based on the monthly contribution made, the year's expected rate of return on investment, the percentage of corpus for which had purchased the annuity and the expected percentage return on the annuity. This illustration is only indicative.
Who Can Use The NPS Calculator?
The NPS calculator is free for anyone who wants to invest in NPS or is starting the planning process for their retirement. The simple interface makes it easy for anyone who wants to know how much money they will have post-retirement or how much they need to save every month to reach their pre-decided retirement goal.
How Can NPS Calculator Help You?
You can use the NPS calculator unlimited times with different variables to help you plan for your retirement, regardless of age.
- Decide on your risk profile and investment strategy.
- Use the NPS calculator to determine how much you must contribute monthly to achieve your desired retirement corpus.
- Compare the projected corpus for various contribution amounts and investment strategies.
- Adjust your contribution amount and investment strategy to achieve your retirement goals.
- Monitor and adjust your contributions periodically to ensure you stay on track to meet your retirement goals.
How Does NPS Calculator Works?
The formula for NPS calculation is as follows:
Maturity value (MV) = P*(1+r/n)^nt where
P: Principal invested
R: Assumed rate of return or the expected rate of return
N: Number of times the growth rate compounds
T: Tenure of the investment
Example:
To understand the NPS formula better, let us look at an example.
Rahul, aged 25, wants to use the NPS calculator as he is looking to invest in NPS for his retirement years. He can invest Rs 5,000 per month and has an aggressive investment strategy (Ability to generate 14% return) over the investment horizon of 35 years (retirement age 60 – current age).
The tool basis the inputs given above will throw out the following results.
Principal invested = Rs 21 lakhs
Gains made on the principal invested = Rs 5.41 crore
Total maturity value = Rs 5.62 crore (principal invested of Rs 21 lakhs + gains made of Rs 5.41 crore)
Lump sum withdrawn @40%, which means he has withdrawn 60% of the money = Rs 3.37 crore
Money invested for annuities = Rs 2.25 crore
Monthly pension expected = Rs 1.24 lakhs
How to Use NPS Calculator?
Following is the step-by-step guide to using the NPS Calculator:
Step 1:
Fill in your "Date of Birth" in the required box.
Based on your DOB, the NPS calculator will compute the years you must contribute to the scheme to accumulate the wanted amount after retirement.
Step 2:
Fill up the "Investment Amount" you wish to invest monthly in the NPS Calculator.
Step 3:
Choose the "Expected Return on Investment."
Step 4:
Choose the "Percentage of Annuity" you want to obtain at the time of maturity of the National Pension System scheme.
The annuity percentage is the fraction of the pension fund that you like to reinvest to buy a per-month annuity after the NPS plan maturity from the ASP.
Step 5:
Fill up the "Expected Annuity Rate."
It is the annuity you want to receive from your pension.
Step 6:
Once you enter the details, the National Pension Scheme calculator will simultaneously calculate the estimated lumpsum amount and pension amount you will take at maturity.
Benefits of the NPS Calculator:
The following are the benefits of the NPS Calculator:
- It saves more time, as you do not need manual calculations.
- You receive the right result every time.
- You can know how much investment you must make to take the desired pension amount.
- Moreover, it helps you to do financial planning more efficiently.
- With the help of a one-stop NPS calculator, you can know the approximate amount you will receive as a pension after retirement.
Conclusion:
The NPS calculator is a useful tool for individuals planning for their retirement. It provides a clear projection of the retirement corpus based on the individual's inputs, investment strategy, and risk profile. It helps make informed decisions about contribution amounts and investment strategies to achieve desired retirement goals.
Faqs:
How much is NPS cut from salary?
Employees make a monthly contribution at the 10% rate of their salary, and the Govt pays a matching contribution to the central Govt.
How much is 5000 per month in NPS?
As per a rough NPS calculator estimate, if someone begins depositing Rs 5,000 per month in NPS for 40 years, they will get Rs 1.91 crore.
What is the maturity period of NPS?
The maturity period of NPS is 60 years.
How much amount will you pay after 60 years in NPS?
Lump sum Withdrawal - In case of exit upon attaining the age of 60 or superannuation lump sum withdrawal, i.e. 60% of the total accumulated pension wealth is tax exempted. Annuity - The amount utilized to purchase an annuity at exit upon attaining the age of 60 years or superannuation is tax exempted.
Is NPS tax-free on maturity?
40% of one's savings is tax-exempt, though if a subscriber buys an annuity for the remaining 60%, they avoid paying tax. The tax had levied on the monthly pension income. At maturity, a subscriber can make a 40% lump sum withdrawal that will be tax-exempt.