Can PPF be Used for Regular Income After Retirement? (Check Rules)

Public Provident Fund (PPF) is a popular investment avenue known for its stability and tax benefits.

Despite no increase in interest rates since 2020, its appeal remains strong.

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But can it provide regular income after retirement?

To understand this, let’s delve into how PPF works.

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PPF Maturity Rules

PPF matures after 15 years, after which it can be extended in blocks of 5 years indefinitely.

During the extension periods, you can continue to earn tax-free interest on your balance and make withdrawals.

Option to Extend the Maturity Period

After the initial 15-year term, PPF account holders can extend their accounts in blocks of 5 years without any contribution limits.

This feature makes PPF a reliable source of tax-free income post-retirement.

When your PPF account matures, if you choose to extend it for another 5 years, you can withdraw up to 60% of the accumulated amount at the beginning of the extension period.

The remaining balance continues to earn interest tax-free.

Use of PPF for Pension Income

Suppose you and your spouse each have Rs 40 lakh in your PPF accounts after 15 years.

By extending these accounts for another 5 years and considering the current interest rate of 7.1%, you can withdraw approximately 7% of the balance annually.

This tax-free income amounts to Rs 2.8 lakh per account per year, totaling Rs 5.6 lakh annually.

Given the tax-free nature of these withdrawals, this translates to a monthly pension income of approximately Rs 46,000-47,000.

This regular income can effectively support your post-retirement financial needs.

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