2023-08-01 07:43:30
Q – I am working in Qatar since 2014 and intend to join Fortune Guarantee Scheme of Tata AIA. If I invest Rs 2 lakh per annum for ten years, I will get Rs 25,000 per month from the 16th year onwards. That too, the scheme is offered for 25 years. 22 lakhs will be received together in the 26th year. Not only that, the earnings are also tax free as they are credited to my NRE account.
1,000 per month is being paid into the National Pension Scheme in the name of his wife. Now it is Rs 60,000. I think you can continue investing till the age of 50. Apart from that, Rs 500 per month is paid in Atal Pension Yojana. 5,000 each from the age of 60. I am 33 now and plan to retire at 50. Now the cost is about 30,000 rupees per month. It is important to know whether it is possible to collect the required retirement fund with this amount. Hope to receive your suggestions in this regard- Harikrishnan, Qatar
Answer – Due to year-on-year inflation, the monthly cost will increase tenfold by the time you retire at age 50. Assuming a 5% annual inflation rate, an item that can be bought for Rs 30,000 today will cost Rs 68,761 in 17 years. Even in retirement, expenses will continue to add up.
Suppose you live to the age of 85. Let’s assume that the post-retirement tax return on investments is 7 percent per annum. In that case, at the time of retirement at the age of 50, you should have accumulated around Rs. 2.09 crores. Meanwhile, if the above annual gain can be increased to 8%, then approximately Rs.1.81 crore will be sufficient. Let’s see how to collect such amount.
If you are in a 7% profit plan, you have to invest around Rs. 6.8 lakh each for the next 17 years. If you get 8% profit, you have to invest Rs 5.4 lakh each for the next 17 years. According to the information provided, the Tata AIA Fortune Guarantee Plus policy offers a return of 7% p.a. on the basis of actual return on premium excluding GST. If GST is added, the annual profit will be even lower.
However, since there is no tax, it is not a bad advantage. Market volatility and bank rate differentials do not affect the benefit. You say that the maturity amount of the policy will be received in the NRE account. However, the claims/maturity proceeds/surrender value of the life insurance policy can be settled in INR only. Payments through foreign currency/NRE account will be allowed only in proportion to the premium paid in foreign currency through foreign currency/NRE account. Whether non-residents or foreign nationals can carry policy claims, maturity proceeds or surrender value out of India will depend on the source of the premium paid fund/account, mode of making claims etc. and RBI guidelines in force at the time of porting abroad. Moreover, the maturity amount is tax deductible for policies with an annual premium of up to Rs 5 lakh.
Now let’s come back to the retirement plan. The income from the policy is only available till the age of 75 years. Pension from Atal Yojana and policy income alone are not enough for post retirement expenses. However, if these two are present, then Rs 1.67 crore will be sufficient for retirement instead of Rs 2.09 crore. Assuming an annual gain of 10% for that, one has to earn Rs 33,310 per month in addition to the amount paid to NPS now. It is better to do SIP in equity mutual funds. Nifty index fund, Sensex index fund and large cap fund can be considered.
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English Summary: How Much Money NRI Need To Retire At 50
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