Do you want to enjoy the golden years of your retirement without any stress? If so, you should start focusing on attaining a good pension amount to make your remaining life stress-free. It is no secret that securing a monthly pension of Rs. 1 Lakh is a dream many aspire to as they prepare for retirement—a time when financial independence becomes more crucial than ever. But turning this dream into reality doesn’t happen by chance. It requires thoughtful planning, smart investment choices, and a solid grasp of the various financial tools available in today’s market.
As you invest your hard-earned money, it’s essential to factor in inflation, your risk tolerance, potential returns, tax liabilities, and the liquidity of your investments. Wondering how you can build a plan that guarantees a Rs. 1 Lakh monthly pension? Let’s explore how the right pension plan and types of plans can pave the way for that goal!
What are the Benefits of Opting for a Pension Plan?
Let’s take a look at the benefits of choosing a pension plan.
- Creates Long-Term Savings
One of the biggest benefits of choosing a pension plan is that it allows you to start saving for retirement years before you actually stop working. With such an extended time frame, your savings have the potential to grow substantially as they get invested and generate returns over the years. These long-term savings eventually become your retirement fund, giving you financial security not just for everyday expenses but also for pursuing hobbies, passions, or even travelling during retirement. It’s more than just money—it’s peace of mind for your future.
- Protects Your Loved Ones
Another interesting highlight of the plans is that they may protect your loved ones. When planning for retirement, it’s not just about securing your future—it’s about your family too, especially those who might still depend on you after you retire. But what happens if you’re no longer there? This is where a pension plan steps in to protect your family financially, even in your absence. If the policyholder passes away, the beneficiaries receive a death benefit, which can either be paid as a lump sum or in regular installments.
- Fights Inflation
It is no secret that the value of money decreases over time due to inflation, which means the cost of living will be much higher in the future. Simply saving money without investing won’t be enough, as inflation will erode its purchasing power. A pension plan helps you combat inflation by investing your savings and generating returns that can outpace rising costs. Over the years, this strategy ensures that your retirement fund maintains its value, helping you meet future expenses without compromising your standard of living.
- Provides Tax-Saving Benefits
Another major highlight of pension plans is that they come with attractive tax benefits that can boost your savings. During the accumulation phase (when you’re contributing to the plan), the premiums you pay are eligible for tax deductions under Section 80CCC of the Income Tax Act, 1961. In addition, when you reach retirement and start withdrawing from your pension, a portion of your savings (up to one-third) is tax-free under Section 10(10A). These tax benefits make pension plans an effective tool not just for building your retirement corpus, but also for reducing your tax liability along the way.
- Provides Insurance Coverage
Last but not least, these pension plans also offer life insurance coverage, which may provide extra security for your family. In case of your untimely demise, your family will receive financial support through the life insurance payout. This coverage ensures that even in the hardest times, your loved ones won’t face financial difficulties, which may help them manage expenses and maintain financial stability.
How to get a Pension of 1 Lakh Every Month?
If you want to get a pension of Rs. 1 lakh every month, the actions you need to take are listed below.
- Stick to Consistency
The first and foremost thing to consider is building a retirement fund takes time, so it’s essential to start saving as early as possible. If you begin in your 20s or 30s, you have the advantage of time, allowing your money to grow through compounding. Make it a habit to set aside a portion of your salary each month specifically for retirement. Remember that automating your savings can help ensure you stay on track and build a substantial amount over time.
- Diversify Your Investments
Don’t put all your money in one place. Instead, diversify your investments across different asset classes like stocks, bonds, and mutual funds to reduce risk while maximizing potential returns. Before investing, consider your financial goals, risk tolerance, and the timeline for when you’ll need the money.
- Explore Different Pension Options
Make sure you spare some time and find pension plans that match your financial situation and risk appetite. If you prefer safety, guaranteed income plans could provide a stable payout. If you’re comfortable with more risk, consider plans with equity exposure, which could offer higher returns. It’s also wise to choose pension schemes that include life insurance to protect your family’s financial future in case of an unforeseen event.
- Regularly Review and Adjust
Another important aspect is that you should Keep an eye on how your investments are performing. Are they growing as expected? If not, it may be time to make adjustments. Periodically reviewing your portfolio ensures you stay on track toward your goal of securing a Rs. 1 lakh monthly pension. As your financial situation evolves, don’t hesitate to increase your contributions or explore new investment opportunities.
- Look for Additional Income Sources
Lastly, if you want to enhance your financial security in retirement, consider creating multiple streams of income. Real estate investments for rental income or turning hobbies into small businesses can supplement your pension. Having several income sources helps provide extra stability and comfort during your retirement years.
Types of Investment Options to consider to get Rs. 1 Lakh pension per month
Here is a list of the investment options to get a Rs, 1 lakh pension per month.
- NPS (National Pension System)
One of the best (or you could say, the best) options to get a Rs. 1 lakh pension per month is NPS, which is a great way to systematically save for retirement. It’s a government-backed, market-linked scheme that allows you to invest regularly and benefit from both growth and tax savings. With NPS, you can accumulate a retirement corpus over time that helps boost your post-retirement income while also offering tax benefits along the way.
- ULIPs (Unit Linked Insurance Plans)
ULIPs offer the dual advantage of investment and insurance. Part of your premium goes toward life insurance, and the rest is invested in funds of your choice, like equity, debt, or a mix of both. This makes it a versatile option for long-term financial planning and securing your family’s future in case of an unfortunate event.
- Pension Plans
Many insurance companies offer pension plans that guarantee regular income after you retire. These plans often provide flexibility in how much you contribute and how you receive your payouts, ensuring you have a steady stream of income during your retirement years.
- Capital Guarantee Plans
This plan combines the benefits of market-linked returns, like a ULIP, with the security of guaranteed capital. So, while your money is invested in the market for potentially higher returns, your initial investment is 100% protected and even offers peace of mind along with growth opportunities.
- Fixed Deposits (FDs)
FDs are simple, secure, and offer a guaranteed return over a set period. You deposit a lump sum with a bank or financial institution, and it earns interest over time. While FDs are low-risk, they can be a good option for preserving capital and ensuring steady returns, especially for those who prefer low-risk investments.
- Bonds
Bonds are secure debt instruments that allow you to lend money to an organization (like the government or corporations) in exchange for periodic interest payments. They’re generally safer than stocks and can help diversify your portfolio, although their value can fluctuate depending on inflation, interest rates, and the issuer’s credit rating.
Frequently Asked Questions
Listed below are the frequently asked questions related to the question- “How to get Rs. 1 Lakh pension per month?”
No, investment markets carry risks, and returns cannot be guaranteed.
Yes, if you invest in an ELSS (Equity Linked Savings Scheme), you can claim a tax deduction of up to Rs. 1.5 lakh under Section 80C of the Income Tax Act, 1961.
You can still work towards your goal, but you may need to invest more aggressively to catch up.
Any Indian citizen between the ages of 18 and 65, whether salaried or self-employed, is eligible to join the National Pension System (NPS).
Start researching different retirement plans, understand the risks and benefits, and calculate how much you’ll need to invest monthly to reach your target.