91Ï㽶»ÆÉ«ÊÓƵ

Once you’ve run your calculation, you can change your contribution levels and retirement date to see how that impacts your retirement picture. Trying different combinations can help you make changes now to achieve the retirement you want.

What information do I need?

Before you start, you need to have the following to hand:

• The current value of any pensions you have

• The amount you contribute to your retirement each month

• The amount your employer contributes to your pension each month

• The current rate of inflation: 1.7%

You also need to know

• The age you want to retire

• Whether you’re on track to get the full state pension

• Your ideal annual pre-tax retirement income

What you’ll find out

The calculator will tell you how big your pension pot could be when you reach retirement. The results are based on assumptions, including your contributions increasing over time, likely investment returns and costs.

It will also tell you how long the money should last if you draw your chosen monthly income. The result will let you know whether you’re on track and saving enough or if you need to reconsider your plans. 

If the numbers fall short, you can look at what changes you need to make to achieve your retirement goals.

Feel free to amend the contribution levels and retirement age you have entered in the calculator to see how they change the forecast. You may find that you can achieve your goals by pushing back retirement a few years or saving a bit more money each month.

Remember, people born today can expect to live into their 80s, so you need a large enough pot to last 20–30 years, depending on when you want to retire. 

You’ll also pay income tax on your pension, so you need to think about how much you need before tax so that you get the monthly payout you want.

How the calculator works

The calculator is only an estimate and is based on several assumptions. These include:

• Fund growth of 3% 

• Contributions, deductions and state pension pay-outs rising in line with inflation 

The calculator does not include provider costs.

How much pension do I need?

There are lots of ways to calculate how much retirement income you need. Think about the lifestyle you want, and how much it will cost you. 

Remember, if you’ve paid off your mortgage by the time you retire, you should need considerably less than if you’re still paying it off. However, if you’re renting, you’ll need to continue making those payments when you retire. 

You should also think about any benefits you will qualify for, along with free and discounted services that you might be able to access once you’re over 60. All of this will impact how much cash you need in your pension fund.

Some experts say you should look at making sure you save enough to provide between 50% and 80% of your current salary, depending on how much you earn. If you’re not on track, you need to either increase the amount you’re contributing, retire later or accept a less costly retirement.