NPS calculator: How much investment in National Pension System is required to get Rs 2.5 lakh monthly pension

NPS Calculator, National Pension System, National Pension System Calculator: Planning a retirement is a very important part of financial planning. The best way to do it is to ensure that you get a decent monthly pension post-retirement. For this, it is important to first fix an amount that you want to get every month. Just to give an example, having a monthly pension of Rs 1 lakh can be good for individuals currently, but 20-25 years down the line it would not be sufficient. This is mainly because of inflation. Considering the annual inflation of 6 per cent, one would need something around Rs 3.2 lakh/month to maintain the same standard. 

The thumb rule for having a good pension at retirement is to start early, preferably in the 20s. For those who are planning to save for retirement, the government-backed NPS is one of the most popular options. 

According to the calculator available on the official website of NPS Trust, if one starts investing Rs 10k per month to the NPS Tier-1 account from the age of 25, he or she could get a monthly pension of around Rs 2.5 lakh or to be precise Rs 2,48,674.

But this is based on certain assumptions. The first one is that you will invest till the age of 60 years and you will get an 11 per cent return on your investment. Also, the expected annuity rate is 6 per cent and you purchase an annuity for 100 per cent of the total retirement corpus generated in 35 years. 

It is to be noted that the ultimate return from the NPS would mainly depend on the choice of the pension fund and its performance during your investment period. There are several funds under NPS that have given a return of up to even 12 per cent, but this can not be guaranteed.