The National Pension Scheme Calculator is a tool designed to help individuals estimate the amount they would accumulate as pension wealth under the National Pension System.
NPS Return Calculator
Welcome to Kartikey Traders' NPS Return Calculator, a tool to help you to calculate national pension scheme return online and plan your retirement with ease and accuracy. The NPS is a government-backed retirement savings scheme that allows individuals to invest regularly during their working life. The accumulated amount can then be utilized to provide an income during retirement.
Why Use a NPS Calculator?
A NPS calculator is beneficial because:
- Financial Planning: Helps you plan your retirement by estimating how much you need to save.
- Decision Making: Allows you to adjust your contributions and retirement age to see how they impact your retirement corpus.
- Visualization: Provides a clear picture of your future financial security through easy-to-understand projections.
How to Use a National Pension Scheme Calculator
Using a NPS return calculator is simple:
- Enter monthly investment amount: Enter the amount you wish to invest every month.
- Enter investment period: Decide for how many years you wish to keep your money invested.
- Enter expected return rate: Estimate the rate of return on your NPS investment. NPS or National Pension Scheme has several funds (equity, corporate bonds, government bonds, etc.) with varying return percentages.
- Annuity purchase: At retirement age, a portion of the total corpus should be used for the purchase of an annuity, often at least 40 per cent. The NPS return calculator is useful in determining how much of one's corpus will go into an annuity and how much can be taken as a lump sum.
Once these details are entered, the National Pension Scheme Calculator then estimates the monthly pension amount you can expect to receive based on the annuity purchased.
Advantages of Using a NPS Calculator
- Ease of Use: When you enter basic information you will receive detailed result of expectation chart.
- Financial Planning: It assists in identifying how much one should set aside in order to meet his or her retirement needs and expectations.
- Adjustable Inputs: Enables you to observe the effects of contributions and rates of return and the qualifying retirement age.
- Realistic Projections: Provide the total view of what possible corpus can be accumulated at the retirement and what pension you can expect and plan.
Example of NPS Return Calculator
For instance, let’s assume:
- Current Age: 30 years
- Retirement Age: 60 years
- Monthly Contribution: ₹5,000
- Expected Rate of Return: 10% per annum
The NPS calculator will:
- Calculate the Total Corpus:
- Accumulate the contributions and returns over 30 years.
- Apply the compounding interest formula to the contributions and the initial balance.
- Estimate the Annuity Purchase:
- Assume 40% of the corpus is used to purchase an annuity.
- The remaining 60% can be withdrawn as a lump sum.
- Project Monthly Pension:
- Based on the annuity purchase amount, estimate the monthly pension.