It is a dream of every salaried person to have finances sufficient for a comfortable retirement. Employees’ Provident Fund (EPF) is a reliable means of saving for private sector employees, providing tax-free returns and long-term financial support. But what would be an ideal monthly contribution to reach a good corpus between 3 to 5 crores?
Let’s go through the basic calculations and important information one must know as an account holder of the Provident Fund.
What Is EPF?
The Employees’ Provident Fund Organization (EPFO) acts for the retirement savings of millions of employees and guarantees an income upon retirement. Thus, a portion is contributed by both the employee and the employer every month, which is 12% of the basic salary, and the government adds interest thereon. The interest rate on EPF is 8.25% at present, making it one of the most lucrative risk-free investment options.
Benefits of EPF
- Tax-free returns under Section 80C of the Income Tax Act.
- Allows for emergency situations like education, marriage, medical emergencies, or purchasing a home.
- Guaranteed returns on EPF, unlike market investment returns.
How Much Should be Contributed on a Monthly Basis to See 3 to 5 Crores?
To build a retirement fund of 3 to 5 crores, disciplined monthly contributions have to be done over a long period. Here are the stepwise calculations considering the current EPF interest rate of 8.25%:
1. Target: ₹3 Crore
- Monthly Contribution: ₹8,400
- Duration: 40 years
- Maturity Amount: ₹3,01,94,804
2. Target: ₹4 Crore
- Monthly Contribution: ₹11,200
- Duration: 40 years
- Maturity Amount: ₹4,02,59,738
3. Target: ₹5 Crore
- Monthly Contribution: ₹14,000
- Duration: 40 years
- Maturity Amount: ₹5,08,70,991
Note: These calculations assume a consistent 8.25% interest rate over 40 years. If the interest rate changes, the maturity amount will vary.
How to Check Your EPF Balance?
Keeping track of your EPF balance is crucial for financial planning. Here are the easiest ways to check:
- Missed Call: Dial 9966044425 (ensure your mobile number is linked to your UAN).
- SMS: Send “EPFOHO UAN ENG” to 7738299899.
- Online: Log in to the EPF Passbook portal or use the UMANG App.