Saving for retirement is very important, especially for senior citizens. While there are many government schemes to help with this, one plan that stands out is the Public Provident Fund (PPF). Most people think PPF is only for saving money slowly over time. But did you know that you can also use PPF to get a monthly income after retirement—up to ₹60,000 per month?
Let’s understand how this smart money trick works and how you can make your retirement financially strong by investing in the PPF scheme.
What is the PPF Scheme?
The Public Provident Fund (PPF) is a long-term savings scheme backed by the government. It offers:
- Safe investment
- Tax-free returns
- Interest on your savings
You can invest up to ₹1.5 lakh per year in your PPF account. Right now, the interest rate is 7.1% per year, and the best part is that it grows with compound interest—which means you earn interest on your interest.
How Does It Become a Monthly Pension Plan?
Normally, a PPF account matures after 15 years. But here’s the trick—after 15 years, you can extend your PPF account in 5-year blocks. You can do this twice, making the total investment period 25 years.
If you continue investing ₹1.5 lakh every year for 25 years, the power of compound interest works in your favor.
Your Savings After 25 Years
Here’s how your money will grow:
- Total investment: ₹1.5 lakh x 25 years = ₹37,50,000
- Total interest earned: ₹65,58,015
- Total fund: ₹37,50,000 + ₹65,58,015 = ₹1,03,08,015
That’s right—over ₹1 crore will be in your account after 25 years!
Don’t Withdraw the Money, Let It Grow
Even after 25 years, don’t take out your money. Just leave it in your PPF account. Your fund will keep earning interest at the rate of 7.1%. You can:
- Withdraw the interest once a year
- Or make partial withdrawals as per your needs
The money in your account stays safe and continues to grow.
How You Get ₹60,000 Per Month
If you leave the ₹1,03,08,015 in the PPF account and just take out the interest every year:
- Yearly interest at 7.1% = ₹7,31,869
- Monthly income = ₹7,31,869 ÷ 12 = ₹60,989
That means you’ll get around ₹60,989 every month, and your ₹1 crore fund will still stay untouched in the account. It’s like getting a regular pension without losing your savings.
Important Note: How to Extend Your PPF Account
To extend your PPF account after 15 years, you must:
- Submit an application to your bank or post office
- Apply within 1 year of the maturity date
- Choose to extend with contributions
This step is very important. If you miss it, you may not be able to continue adding money and earning more interest.
Final Thoughts
If you’re looking for a safe and smart way to build retirement income, the PPF scheme is a great option. By investing ₹1.5 lakh every year for 25 years and letting your money grow, you can build a fund of over ₹1 crore. Then, by withdrawing just the interest, you can enjoy a monthly pension of over ₹60,000. It’s a smart financial strategy for senior citizens who want peace of mind and financial freedom after retirement. Just remember to extend your account properly and stay consistent with your savings.
FAQ’S
FAQ 1: Can I invest more than ₹1.5 lakh per year in PPF?
No, the maximum limit for PPF investment is ₹1.5 lakh per financial year.
FAQ 2: Is the interest earned from PPF taxable?
No, the interest earned from PPF is completely tax-free under Indian tax laws.
FAQ 3: Can I withdraw money from my PPF account before 25 years?
Yes, partial withdrawals are allowed after the 6th year, but full withdrawal is only possible after 15 years or at maturity.