With the current inflation rate and price rise, an average family spending 1 lakh will need a 5.7 lakh monthly pension post retirement. An average Indian around 30 years of age having 1 lakh disposable expenses may need above 5 lakhs per month keeping 6% inflation in the loop. Â
Are Indian middle-class and above-middle families ready for this corpus?
The national pension scheme is a voluntary retirement saving system in India that offers subscribers to make a definite contribution to their retirement plan and safeguard their future. The plan is under the jurisdiction of the Ministry of Finance and is governed by the Government of India.
NPS or national pension scheme account will help contribute Rs. 10,000 per month for 30 years enabling a monthly pension of Rs. 2.24 Lakh or if the beneficiary purchases the annuity by paying the entire accumulated corpus of approx. 4.15 CR.
In annuity plans, NPS offers security against inflation and the rising cost of living in the future.
NPS prosperity planner or NPP shows that targeted pension amount can only be availed post-retirement if projected retirement expenses are planned beforehand. In the current market scenario, for higher retirement income, it is important to take accelerated contribution plans so that the future rising cost of living expenses can be managed without stress.
The current-age working population can easily build a handsome retirement corpus if they plan beforehand and understand the rising cost of living that will be present in the future. Not only investment but periodical enhancement of savings is also needed to balance this income-expense gap post-retirement.
Healthy returns from NPS make this a preferable platform to invest deeply and maximize gains in the future. When investors take a normal exit from NPS, the investors use their accumulated funds to purchase a life annuity so that their future expenses can be handled through a regular pension. NPS plans are structured into both withdrawable and non-withdrawable schemes so that investors can choose wisely how to invest their money.
Benefits of NPS in current inflation and rising cost scenario:
It is a flexible way of investing your current savings to create a futuristic flow of money.
It is portable as the NPS scheme can be seamlessly transferred to different jobs, locations, and organizations without having to lose any corpus created.
It has the power of compounding providing numerous financial benefits post-retirement.
It is available online and therefore is highly accessible to present-day youth.
