With more and more people opting for private jobs, it has become essential to plan for retirement. The National Pension System is a voluntary retirement saving scheme. NPS is the least-cost investment option for those building their retirement corpus. NPS allows Indian citizens an additional deduction for tax savings of up to Rs. 50,000 under sub-section 80 CCD (1B) and the chance to construct a retirement fund.
The asset classes are market-linked, thus allowing investors to build on their corpus.
NPS calculator and the way it helps
The NPS calculator calculates the pension amount and the lump sum a person will receive after retirement. You should make a monthly decision to contribute towards NPS. The power of compounding is what makes it a lucrative retirement solution.The calculator helps in the following ways:
- It calculates the amount a person will get after retirement. The use of the calculator is essential to figure out that amount.
- The calculator also reveals the amount you can withdraw post-retirement. This is because you cannot withdraw the whole amount. About 40% of the total sum should be invested in the annuity, and the remaining 60% is subjected to taxation.
- The calculator also ascertains the taxation regime on pension funds. It helps in knowing the amount left after the tax has been deducted.
- Lastly, the calculator makes error-free calculations by automating the whole process.
How does the NPS calculator work?
The NPS Pension calculator is a simple tool that anyone can use. Following are the steps to use the calculator for determining the maturity value.
Step 1: Enter the investment amount that you wish to invest. You can make monthly or yearly contributions to the NPS.
Step 2:You can choose an investment strategy based on your risk appetite. Some options include aggressive, moderate, conservative, and custom risk profiles. The predetermined risk profiles offer predicted returns from each NPS investment strategy.
Step 3: Since age is an essential factor in the NPS, you need to add your current age to the box. The years till retirement, capped at 60 years, are calculated using the current age. Therefore, if an investor enters their current age as 29, the number of years till retirement would be (60-29) 31.Based on this information, the calculator shows the total amount invested, gains made on the investment, and maturity value.
The NPS calculator is essential to calculate the amount you wish to accumulate at the end of your retirement. It manages your finances accordingly.
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