How Can You Get Monthly Pension of Over Rs.87,000 by Investing Only Rs.7,000?
By Team CodeForBanks | June 02, 2025
Planning for retirement is crucial and the National Pension System (NPS) offers a structured way to build a substantial pension corpus with disciplined investing. With rising inflation and increasing life expectancy it is very essential to secure a stable pension post-retirement to enjoy financial freedom.
Many wonder if it is possible to secure a monthly pension of over Rs.87,000 by investing just Rs.7,000 per month. The answer is yes, it is very much possible and it can be achieved through long-term investing and strategic asset allocation. Thanks to the power of compounding and strategic investments in the National Pension System (NPS) to make it possible in real terms. This is one of the best pension plans in India.
Understanding NPS and Its Benefits
NPS is a government-backed pension scheme in which individuals can contribute regularly to create a retirement fund. At maturity, a portion of the corpus can be withdrawn as a lump sum while the remaining portion is invested in an annuity plan in NPS to get a monthly pension.
Key Benefits of NPS
- Market-linked returns with diversified asset allocation.
- Tax benefits on NPS are available under Section 80CCD(1B) of the Income Tax Act.
- Flexibility in choosing investment options and fund managers.
- Low-cost structure compared to other retirement plans.
- One of the best tools for retirement savings.
How Can You Get Monthly Pension of Over Rs.87,000 by Investing Only Rs.7,000?
Let us see how investing Rs.7,000 per month can help you achieve a monthly pension of over Rs.87,000 by investing in NPS.
Assumptions
- Your investment starts at age 30.
- Your investment ends at age 60.
- Expected annual return on NPS investments is 10%.
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There is an option in the NPS that you can withdraw 60% of the accumulated corpus and invest 40% of the corpus in an annuity plan with a 8% annuity rate. You can even invest whole corpus in an annuity in order to get higher monthly pension.
Let us now do Step-by-Step Calculation to arrive at the pension amount after your retirement.
Step-by-Step Calculation
Total Investment Over 30 Years
Rs.7,000 per month × 12 months × 30 years = Rs.25.20 lakh.
Retirement Fund growth with 10% annual returns.
Using compounding, the corpus grows to approximately Rs.1,31,57,155.
| Investment Type | Calculation | Amount (Rs.) | Description |
|---|---|---|---|
| Lump Sum Withdrawal (60%) | Rs.1,31,57,155 × 60% | Rs.78.94 lakh | You can withdraw this amount at retirement. |
| Annuity Investment (40%) | Rs.1,31,57,155 × 40% | Rs.52.62 lakh | You have to invest at least 40% in an annuity. |
Let us assume that you do not withdraw anything and invest whole corpus i.e. Rs.1,31,57,155 in annuity then,
Monthly Pension Calculation How to get Rs.87,000 Pension?
If you do not withdraw anything and invest whole corpus i.e. Rs.1,31,57,155 at 8% annuity plan then
Rs.1,31,57,155 × 8% ÷ 12 months = Rs.87,715 per month.
By consistently investing Rs.7,000 per month in NPS, taking the benefit of power of compounding and choosing the right annuity plan, you can build a retirement corpus which will provide a monthly pension of over Rs.87,000. With the help of this NPS investment strategy, you can enjoy financial security and a comfortable & tension-free life after your retirement with proper and timely Retirement planning.
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