How to Get a 1 Lakh Pension Per Month?

Investment Options for Building a Retirement Corpus

Achieving a monthly pension of ₹1 lakh requires disciplined planning and early action. Here are the 2 best options which can help you achieve this goal:

1. NPS (National Pension System):

   • NPS is a voluntary defined contribution retirement scheme aimed at providing a steady income stream post-retirement.

   • It is designed to empower subscribers to make optimal decisions impacting their future through sustained savings during their working life.

   • The Pension Fund Regulatory & Development Authority (PFRDA) governs the scheme and invests in market-linked hybrid funds.

2. NPS Account Structure:

   Tier-I Account:

   • Mandatory account where contributions accumulate, both from subscribers and employers.

   • Withdrawals are restricted until subscribers comply with NPS exit rules.

   • 40% of the corpus must be reinvested in an annuity, while the remaining 60% can be withdrawn tax-free.

   Tier-II Account:

   • Optional account allowing contributions at the subscriber's convenience.

   • No restrictions on withdrawals during the NPS tenure.

3. Financial Planning for 1 Lac Pension:

   • Subscribers have the flexibility to choose investment products, such as allocating 60% in equity assets and 40% in debt.

   • This balanced mix yields approximately 10% returns.

   • Assuming a 30-year tenure, subscribers must contribute ₹15,000 monthly to attain a 1 lakh pension.

   • 60% of the retirement corpus is invested in an annuity, which returns 6% annually.

4. Alternative Investment Scenario:

   • With a 20-year investment horizon, subscribers must invest ₹32,000 per month.

   • This assumes a 12% return rate to build a similar retirement corpus within a shorter time frame.

5. SIPs (Systematic Investment Plans):

   • For non-salaried individuals and the self-employed, SIP investments serve as an important component of retirement planning, offering a balanced exposure between equity and debt funds.

   • Achieving a monthly pension of 1 lakh requires a targeted retirement corpus, which can be attained within a 20 to 30-year investment horizon, making it a realistic goal for investors.

   • Systematic Investment Plans (SIPs) provide the most accessible pathway to reaching this financial milestone, offering affordability and sustainability over the long term.

   • SIPs offer multiple advantages, catering to investors of all sizes. With no upper limit, they are inclusive and well-suited for retirement planning.

   • Initiating an SIP requires a monthly investment of ₹500, available through both online and offline channels, enhancing accessibility for investors.

   • SIPs provide flexibility in asset allocation, allowing investors to transition between equity and debt asset classes seamlessly.

   • Equity Linked Savings Scheme (ELSS) funds enable tax savings in line with prevailing tax laws, enhancing the attractiveness of SIPs as a retirement planning tool.

   • To achieve a 1 lakh pension, starting an SIP at age 30 with a 30-year investment horizon can yield substantial returns. For instance, a monthly SIP investment of ₹5666, generating a corpus of ₹2 Crore by age 60 (assuming a 12% annual yield), represents a standard performance benchmark within funds.

   • By deploying 100% of the accumulated corpus, investors can reasonably anticipate a monthly pension of ₹1 lakh, assuming a conservative 6% annual return, which aligns with prevailing annuity standards.

Other Investment Options That You Can Consider

• Unit Linked Insurance Plans (ULIPs): Explore ULIPs that combine insurance coverage with investment opportunities in equity, debt, or hybrid funds, providing potential for growth along with life cover.

• Pension Plans: Consider pension plans offered by insurance companies, which provide regular income post-retirement and often offer flexibility in contribution and payout options.

• Capital Guarantee Plans: Invest in capital guarantee plans offered by financial institutions, which assure the return of your principal investment while also offering the possibility of earning returns linked to market performance.

• Annuities: Opt for annuity plans from insurance companies, which provide a guaranteed monthly income in exchange for a lump sum investment.

• Fixed Deposits (FDs) and Bonds: Allocate a portion of your savings to fixed deposits and bonds to ensure a stable and secure income during retirement.

• Mutual Funds: Invest in mutual funds with a balanced portfolio of equity and debt instruments to generate steady returns over the long term.

How To Plan for Monthly Income After Retirement?

• Assess the current financial situation, including expenses, savings, and investments.

• Determine desired retirement lifestyle and estimate retirement expenses.

• Explore retirement investment options such as ULIPs, pension plans, annuities, mutual funds, and real estate.

• Consider factors like risk tolerance, time horizon, and inflation when selecting investment vehicles.

• Aim to build a diversified portfolio that generates regular income while preserving capital.

• Continuously monitor and adjust retirement plans as financial circumstances and goals evolve. 

• Proactively plan and invest for retirement to ensure a steady stream of income during golden years.

Conclusion

Achieving a 1 Lakh monthly pension required strategic financial planning, disciplined investment, and a diversified approach to wealth accumulation. Individuals can work towards securing a stable and fulfilling retirement by using various investment options such as mutual funds, SIPs, annuities, and pension plans. With careful planning and diligent execution, realizing the goal of a 1 Lakh pension per month is within reach for those who are on the journey of retirement preparedness.