Hi, I am thinking of buying a pension plan through which I could get a good fixed monthly income after I retire ( let's assume 60 years). I am currently 32 year old and looking to invest around 20k per month. I am currently working with a startup.I first thought about NPS and also some plans on Policybazar. I founds that plans mentioned on Policybazar like Tata AIA life insurance capital guarantee solution can offer upto 6.5L/month tax free income after I turn 60 with just 20K investment per month for next 12 years. Where as if I invest 20 k per month in NPS till i turn 60 I will only get 1.8 lakhs per month
I want to understand
Pension Plans are a bad idea. Ask them to show you a calculation of the RoI over the years.
I'd be surprised if it's anything above 6%. It's one of the worst products on the market.
Talk to a good financial planner. Build a diversified asset portfolio - 60 Equity: 40 Debt. Keep pumping in money and rebalance annually.
You'll have enough monthly withdrawable via this corpus.
Can you elaborate more on this!
You'll barely meet inflation with the pension plan. You'll have inadequate insurance cover. It has inadequate tax benefits (if thats what you are looking for).
It's an old product with mixes insurance and investing - costs are higher vs you doing those two financial goals independently.
My first hypothesis here is - NPS will provide you 60% lump sum and only 40% goes into annuity. I guess you missed the 60% part. Overall, monetary benefits in NPS would be higher as it’s a market driven instrument with Indian markets expected to roar in coming decades.
Can you add some calculations here? Tata AIA is an annuity plan, bit confused how the numbers are so high.
P.S. - Mixing insurance & money backs is worst financial instrument.
I am in mid 20s How much should I invest in NPS to have a decent pension post 60?
NPS is very good. You can consider. You don't necessarily need pension plans to plan your retirement. You can plan it through SWP in mutual funds, participating plans etc too. Retirement and health insurance planning are complicated. Have a holistic plan instead of thinking too much about pension. You can use NPS for annuity plans too during maturity. Contact a CFP, certified financial planner or if you want to mail me, SreekanthAdvisory@gmail.com. I'm an IRDAI insurance advisor and NISM certified mutual fund distributor.
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