Retirement calculator

How to use the retirement calculator

What it calculates and when to use it

Projects your pot at retirement and compares it with the pot you need to pay your chosen income for the rest of your plan, showing any shortfall and the extra monthly saving to close it.

How to use it, step by step

1. Enter your age, retirement age and the age to plan to.
2. Enter what you have saved and what you save each month.
3. Enter returns before and after retirement and inflation.
4. Enter the income you want and any other income such as a state pension, in today’s money.

What each input means

• Income you want – Per year, in today’s money.
• Other income – State pension or other guaranteed income, in today’s money.
• Returns – Yearly growth before and after you stop working.

How to read the results

• Pot at retirement – Projected pot, and the same in today’s money.
• Pot needed – The pot that pays your income gap for the planned years.
• Shortfall or surplus – Pot needed compared with your pot, in today’s money.
• Save extra each month – The additional saving needed to close a gap.

The formula

Pot = savings × (1 + g)^n + monthly × ((1 + g)^n − 1) ÷ g with g the monthly return. Real return after retiring = (1 + return) ÷ (1 + inflation) − 1. Pot needed = income gap × (1 − (1 + real)^−years) ÷ real × (1 + real).

A worked example

A 35-year-old retiring at 67, planning to 92, with 40,000 saved and 500 a month at 6%, wants 30,000 a year in today’s money and has 11,500 of other income. The pot reaches 818,313, which is 371,326 in today’s money. The pot needed is 390,642, a shortfall of 19,315; saving about 38 more a month closes it.

Assumptions and limits

• Constant returns and inflation.
• The pot is drawn down evenly in today’s money.
• Tax is not included. Pensions and withdrawals may be taxable.

Common mistakes

• Forgetting inflation, which erodes spending power.
• Assuming retirement lasts only to average life expectancy.

Frequently asked questions

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