How to Get ₹2 Lakh Pension Per Month?

You can get a pension of 2 Lakh per month by adopting some of the following systematic strategies:

To get a pension of 2 Lakh per month, you need to build a substantial corpus by the time you retire. You can purchase an annuity at around 6% p.a. with 40% of the retirement corpus mandatorily. With the remaining amount, you can either withdraw as a lump sum or reinvest.

To achieve you pension goal, you need to have a corpus of around ₹2.77-4.29 crore, depending on age, returns, and annuity rates.

The table below represents the monthly investment amount as per age to get a monthly 2 Lakh pension after retirement:

Here are some of the best investment plans that can help you get a 2 Lakh pension per month:

If you want to generate a 2 Lakh pension per month in NPS, here are some of the factors that you should consider:

• Monthly Contribution Amount: Starting your investment at an early age helps build a substantial corpus for retirement. Therefore, you need to start investing as early as possible. Let’s assume you start investing at the age of 35. To get a 2 Lakh pension per month, you need to build an accumulated corpus of ₹2.77 crore at the age of 60. For that, you need to invest ₹20,700 per month for 25 years.
• Allocation of Assets: There are two types of investment options under NPS asset allocation. They are active choice and auto choice. Under active choice, you can allocate the corpus to equity, government and corporate debt, and alternative investment.
  
  You can invest 75% of your corpus in equity. However, if your age is above 50, the allocation will reduce by 2.5% each year. For auto choice, asset allocation will depend on your age.
• Purchase Annuity: You need to buy an annuity with at least 40% of the corpus amount to generate regular pension payments. The remaining 60% can be withdrawn as a lump sum and then reinvested in an annuity to generate a monthly pension. However, returns from an annuity are subject to the market conditions.

Here are some of the benefits of investing in a 2 Lakh pension plan early in life:

• Your Investment Gets Enough Time to Grow: When you invest early, your corpus gets a longer time to leverage compounding. For instance, if you start investing ₹5000 per month at the age of 25, you will build a larger corpus than that of a person who starts investing at 35.
  
  Even if that person invests double the amount of your investment, he will end up creating the same retirement corpus as you. However, remember that you pay half and still get the same corpus.
• Offers Flexibility While RetiringIf you have secured your retirement with an assured monthly pension, you can retire whenever you want. You can retire early if you have accumulated a corpus to offer you a 2 Lakh pension per month. Alternatively, you may reduce your working hours and pursue your hobbies or other activities.
• Saves Tax: Investment in a ₹2 Lakh pension per month via NPS offers a 10% deduction of salary under section 80 CC(D)1. The overall limit of tax exemption is 1.5 Lakh. You can also get an additional tax deduction of up to ₹50,000 over the 1.5 Lakh ceiling under Section 80 CCE.
  
  However, these benefits are only available under the old tax regime.
• Risk Management Through Diversification: You can invest in equity-oriented assets like equities, equity mutual funds, and ULIPs/pension plans. You can choose a high equity allocation if you have a longer investment window. These investments can yield long-term returns to balance inflation. However, they are typically unstable in the short run.

To choose the best assets that can help you get a 2 Lakh pension per month, do the following:

• Assess Your Budget:Pension plans differ in terms of their maximum and minimum investment limits. So, before choosing a plan, you need to assess your budget.
• Check the Returns Offered by a Plan: Assess the returns of different plans like NPS, government bonds, hybrid mutual funds, etc. This helps you plan your investment well and get the benefits of risk diversification.

Investing in a 2 Lakh pension plan is necessary to secure your financial future after retirement. However, you need to consider some crucial factors before you begin investing. These factors include market conditions, investment starting age, and your monthly investment amount.

Consider starting early, as it helps you get the benefits of compounding for an extended time period. You can also increase your contributions as your income rises.