This tool helps you estimate how much money you will have when you retire using the government pension plan. It also calculates the monthly pension payment you will receive. It helps you plan a worry-free retirement with regular lifelong income. It is the perfect tool to secure your future years.
- 1
Monthly Contribution: Type the money you want to invest into the pension fund every month.
- 2
Expected Return Rate: Type the yearly growth percentage you expect from your pension fund.
- 3
Your Current Age: Type your current age in years. The investment stops when you reach 60.
- 4
Expected Annuity Rate: Type the annual interest rate you expect to earn on your pension scheme.
- 5
Annuity Reinvestment: Type the percentage of your retirement money used to buy the monthly pension plan.
- The Concept: Think of this as a two-stage rocket. Stage one is the savings stage, where you put in money monthly, and it compounds until you turn 60. Stage two is the payout stage. At age 60, you withdraw a tax-free chunk of cash, and the rest is locked in a secure account that pays you a steady monthly salary for the rest of your life.
- The Formula:
Total Corpus = Accumulation of monthly deposits compounded at the return rate until age 60.
Monthly Pension = (Total Corpus × Annuity Reinvestment % × Annuity Rate %) / 12
For example, if you are 30 years old and invest ₹10,000 monthly with a return rate of 10% until age 60. Over 30 years, you accumulate ₹2,27,93,902. If you reinvest 40% into a pension plan at an interest rate of 6%, you get ₹1,36,76,341 as tax-free cash. The remaining ₹91,17,561 buys a lifelong pension, paying you ₹45,588 every single month.
