How One Retiree Uses NPS to Get ₹80,000/Month Tax-Free

Written by: Kusum KumariUpdated on: 24 Oct 2025, 8:04 pm IST

A retired engineer uses NPS’s Systematic Lump-sum Withdrawal to generate ₹80,000/month largely tax-free, combining annuity, SLW, and low-risk investments.

Ajay Agarwal, a 60-year-old retired ONGC engineer from Vadodara, turned his ₹1.2 crore retirement corpus into a disciplined, largely tax-free income stream using the National Pension System (NPS).

Systematic Lump-sum Withdrawal (SLW) Strategy

Instead of withdrawing his corpus all at once or investing in fixed deposits, Ajay transferred his PRBS corpus into NPS in 2020. He contributed for 5 years post-retirement and structured his withdrawals to get ₹90,000 per month:

₹50,000 from SLW starting 2026
₹40,000 from a joint-life annuity

SLW allows retirees to withdraw 60% of the non-annuity portion gradually until age 75, while the remaining corpus continues compounding, largely tax-free. Ajay also opted for a 6% annual step-up to increase his SLW over time.

Diversified Retirement Income

Ajay’s monthly income comes from multiple sources:

40% SLW (tax-free)
30% annuity (6.79% p.a. joint-life with return of premium)
30% other sources like SCSS, bank deposits, and mutual funds

Low-Risk and Flexible Approach

His NPS corpus is invested 90% in debt and 10% in equity, targeting around 9% annual returns. The plan offers control, predictability, and low cost, keeping his income under the ₹12 lakh tax bracket.

Conclusion

Ajay’s strategy shows how NPS, often overlooked, can provide a practical, low-risk blueprint for generating ₹75,000–₹80,000 per month post-retirement, combining tax efficiency, compounding, and flexibility.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.

Published on: Oct 24, 2025, 2:34 PM IST

Kusum Kumari

Kusum Kumari is a Content Writer with 4 years of experience in simplifying financial market concepts. Currently crafting insightful content at Angel One, She specialise in breaking down complex topics into easy-to-understand pieces, blending expertise in market fundamentals and technical analysis.

Know More