Planning for retirement isn’t just about saving money—it’s about ensuring peace of mind when your monthly paycheck stops. And if you’re wondering whether investing ₹5000 every month in NPS (National Pension System) is worth it, you’re in the right place.
What Is NPS & Why Should You Care?
The National Pension System (NPS) is a government-backed retirement savings scheme. It’s designed to help you build a solid retirement fund while also giving you great tax benefits.
It’s managed by the Pension Fund Regulatory and Development Authority (PFRDA), and anyone between the ages of 18 and 70 can invest in it.
The best part? You don’t need to be a salaried employee. Self-employed people can also invest and secure their retirement.
How Does NPS Work?
When you invest in NPS:
- Your money is split between equity and debt instruments based on your age and chosen risk profile (like conservative, moderate, or aggressive).
- At retirement (age 60), you can withdraw up to 60% of your total NPS corpus as a lump sum.
- The remaining 40% must be used to buy an annuity, which gives you a fixed monthly pension for life.
So in short, you get both—a big amount when you retire plus a steady pension for your monthly needs.
What Are the Tax Benefits of NPS?
Here’s the good news for tax planning:
You can claim up to ₹1.5 lakh deduction under Section 80C
And an additional ₹50,000 under Section 80CCD(1B)
That’s a total of ₹2 lakh in tax savings every year!
What Happens If You Invest ₹5000 Every Month?
Let’s break it down with a real-life example:
- Your current age: 18 years
- Monthly contribution: ₹5000
- Investment style: Aggressive (you prefer higher equity allocation)
- Expected return: Up to 14% annually
By the time you turn 60:
- Your total investment: ₹25.2 lakh
- Your maturity amount: ₹14.95 crore
- Your gains alone: ₹14.7 crore
Now let’s talk pension:
You’ll use 40% of your corpus to buy an annuity
That alone can give you a monthly pension of ₹3.29 lakh
If you’re in the 20% tax slab, you also save approx ₹5.04 lakh in tax over the years
Why Start Early?
Starting NPS at 18 might seem too early, but it’s your biggest advantage. Thanks to compounding, even a small amount like ₹5000 a month can turn into multi-crore wealth over 42 years.
Imagine reaching your 60s and not having to depend on anyone—not your children, not the government. You’ve built your own freedom.