Retirement is often seen as a golden chapter of life—a time to unwind, enjoy with loved ones and live without the usual hustle and worries. But a financial setback during this phase can quickly turn those dreams into stress. That’s why securing your financial future through early retirement planning is essential.
While we may enjoy a healthy income in our younger years, the reality is that earning opportunities tend to shrink as we age. Preparing in advance for the inevitable loss of income post-retirement is crucial. If you work in the public sector, a pension might be part of your retirement package, but with the ever-rising cost of living, it’s unlikely to cover all your expenses.
Building a strong retirement portfolio ensures that when you retire, you can count on a stable monthly pension—ideally INR 50,000 or more—so you and your family can continue to live comfortably without financial strain.
Let’s discuss the benefits, tips, and top investment options that may help you get a Rs. 50,000 per month pension.
Benefits of Choosing an Investment cum Retirement Plan
Let’s examine the benefits of choosing retirement plans that provide a pension of 50K per month.
- Steady Retirement Income
One of the biggest benefits of choosing a retirement plan is that it guarantees a regular stream of income after you retire, ensuring that you can maintain your financial independence and lifestyle. This steady flow of funds allows you to meet day-to-day expenses without worrying about a reduced income once your working years are over.
- Potential for Higher Returns
Unlike traditional government schemes, many investment plans offer the opportunity for market-linked investments. This means your money has the potential to grow at a higher rate, giving you better returns over the long term and helping to build a stronger financial cushion for retirement.
- Tax Advantages
Opting for a retirement plan comes with tax-saving benefits. Contributions to the plan are eligible for deductions under Section 80C of the Income Tax Act, which can reduce your taxable income. Although the pension income you receive may be partially or fully taxed, the upfront savings can make a significant difference.
- Encourages Regular Savings
Last but not least, retirement plans instil the habit of disciplined savings by requiring regular contributions. These automatic contributions ensure that you consistently set aside money for your retirement, which may help you build a substantial corpus over time without needing to make conscious decisions each month.
Tips To Getting a Pension of Rs. 50,000 Every Month
Let’s take a look at the experts’ tips to get Rs. 50K per month.
- Start Early and Stay Consistent
One of the best tips to consider for your 50K pension is that the earlier you begin saving for retirement, the better. Starting in your 20s or 30s gives your investments more time to grow through compounding returns. Make sure you set aside a portion of your income for retirement right from your first paycheck, and automate your savings to make sure you’re consistently building your retirement fund. The longer you invest, the more you can accumulate, setting yourself up for a larger monthly pension.
- Diversify Your Investments
Avoid relying on just one type of investment. Explore a variety of investment options that align with your retirement goals. Creating a diverse portfolio that includes a mix of fixed-income and market-linked investments can help you minimize risks while maximizing returns. Consult a financial advisor to help identify the best combination of investment vehicles to ensure you’re on track for that Rs. 50,000 monthly pension.
- Consider Pension Plans
Make sure you look into retirement-specific pension plans that offer a guaranteed income stream after retirement. These plans often provide lifelong income along with life insurance coverage to protect your family. By choosing a pension plan that allows you to build a significant retirement corpus, you can ensure a monthly payout of Rs. 50,000 to support your post-retirement lifestyle.
- Regularly Review and Adjust Your Portfolio
Make it a habit to review your investments every few months. Assess whether your portfolio is meeting your goals and adjust accordingly. If certain investments aren’t performing well, consider reallocating funds to better-performing options. Furthermore, it’s also a good idea to increase your monthly savings and contributions as your income grows to help boost your retirement corpus.
- Explore Additional Income Streams
Lastly, make sure you think beyond traditional savings and investments. Consider building additional sources of income, such as rental income or a small side business, to supplement your retirement fund. Multiple income streams will not only provide added financial security but also give you greater control over your finances after you retire.
5 Best Investment options to get a 50K Pension Per Month
Here are the 5 best investment plans to get Rs. 50,000 per month.
1. Unit-linked Insurance Plans (ULIPs):
ULIPs are a type of investment and insurance plan combined, where the returns are linked to market performance. Some ULIPs are designed specifically for retirement, providing income after you stop working. In a ULIP, part of the premium you pay goes towards life insurance, while the rest is invested in stocks or mutual funds. You can also switch between different funds if you’re not happy with the returns. To aim for a pension of Rs. 50,000 per month, you may need to invest around Rs. 11,000 to Rs. 12,000 monthly for at least 25 years.
2. National Pension Scheme (NPS Scheme):
The National Pension Scheme (NPS) is a government-backed pension plan that helps you build a financial safety net for retirement. It allows you to save regularly and systematically, creating a future source of income. The money you invest is pooled with other investors’ funds and reinvested in the market to generate additional returns.
As you approach retirement, you can withdraw a portion of the total amount you’ve saved. The rest can be used to purchase an annuity plan from an insurance company, which will then provide you with a monthly income after you retire. The National Pension System calculates returns using compounding interest. Here is the formula-
A = P (1+ r/n) ^ nt
Here,
- A = Amount
- P = Principal sum
- r/n = Rate of interest per annum
- N = Number of times interest compounds
- T = Tenure
For example,
Mr Kumar, who is working as a senior software developer at the age of 30, plans to contribute Rs. 5,000 monthly towards his retirement fund. With a tenure of 30 years until he reaches the age of 60, his total annual contribution will amount to Rs. 60,000, which may lead to a total investment of Rs. 18 lakh over this period. Assuming a 9% annual interest rate, his contributions are expected to grow significantly due to compounding, which would help him accumulate a substantial retirement corpus.
So, the return she can expect:
Principal (P): Rs. 60,000 × 30 = Rs. 18 lakh (total investment over 30 years)
The expected maturity value is approximately Rs. 1.11 crore.
3. Guaranteed Return Pension Plans:
Guaranteed return pension plans provide you with a steady monthly income after retirement while also offering insurance protection. These plans not only ensure a fixed payout each month, but they also secure your family’s financial future in case of an unfortunate event, such as your passing. With these plans, you receive a lump sum payment at maturity along with the option for long-term monthly pension payments. If you’re aiming to receive Rs. 50,000 per month after retirement, you’ll need to invest in a fully guaranteed return plan for at least 10 years.
4. Mutual Funds:
These investment options are tied to the market, offering the potential for high returns by investing in both equity and debt. However, with higher returns comes higher risk, so investors need to be prepared to take on that risk. If you want to balance the risk, you can consider investing through systematic investment plans (SIPs), which spread your investment over time. Once you’ve built a sufficient corpus through mutual funds, you can allocate a portion of it to an annuity, which will provide you with a steady income throughout your retirement.
5. Annuity Plans:
Annuity plans are financial products designed to provide a steady stream of income to investors, particularly during retirement. When you invest in an annuity plan, you make a lump sum payment or a series of payments to an insurance company. In return, you receive periodic payouts based on your investment amount.
These payouts can be tailored to be disbursed every month, allowing you to meet your financial needs after you retire. One of the key features of annuities is that they are typically structured to provide income for the rest of your life, offering a sense of financial security and stability in your later years.
Frequently Asked Questions
Listed below are the frequently asked questions related to the question “How to get a 50K pension per month”.
The amount you need to invest depends on your returns and annuity rates. You can use online calculators, like the NPS Calculator or SIP Calculator, or talk to a financial advisor for a more personalized estimate.
There isn’t a specific maximum monthly pension limit in India. However, some schemes have limits on how much you can contribute, which can affect your final pension amount.
No, annuity plans do not include life insurance coverage. They only guarantee periodic payments to you throughout your life or for a set period.
Yes, pensions are usually paid monthly. However, you can also choose to receive them annually.
Pension plans work in two stages. First, during the accumulation stage, you pay premiums until you retire. Then comes the distribution stage, where you receive a monthly pension based on the money you invested after retirement. This is how pension schemes operate in India.
