Pensions Retirement Calculator
How much do I need in a pension to retire in the UK?
There is no single figure, but this calculator is a useful tool.
Start with what you want to spend each year in retirement, based on what your life costs now, and consider whether that should be adjusted for the mortgage and commute ending. Then subtract guaranteed income: State Pension, any final salary pension, rental income. The gap left is what your own savings must cover, and that is what sets the size of the pot. It's worth noting your pot can include pensions, ISAs, savings accounts, and other investments too. This calculator just models pension contributions as it is the most common way people will save for retirement.
Some people go by the 4% rule, which means that your pot could provide an income of 4% and be unlikely to run out over a 30-year retirement. This would mean that a shortfall of £10,000 could be met from a pot of £250,000.
At Wilfredson's, we use much more sophisticated modelling and assumptions to show how much money you'd actually need, or how much income you could afford to take from the pot you've accumulated. That said, it's definitely an art more than a science.
What is drawdown, and how is it different from an annuity?
An annuity swaps your pension pot for a guaranteed income for life. Drawdown keeps the pot invested and you withdraw from it as needed. An annuity is permanent and usually leaves nothing to pass on. Drawdown stays yours and passes to your family, but can run out. Both allow 25% tax free, capped at £268,275.
Taking taxable drawdown income cuts future pension contributions from £60,000 a year to £10,000 by triggering the Money Purchase Annual Allowance (MPAA) regardless of your taxable income.
Is this calculator financial advice?
No. This calculator is a tool for exploring what might be possible, and it knows nothing about you beyond what you type into it. Advice means a recommendation from a regulated firm that understands your circumstances, tax position and goals. Use the calculator to work out which questions are worth asking, not as the basis for a decision you cannot reverse.
The value of investments can fall as well as rise, and you may get back less than you put in. Tax treatment depends on individual circumstances and may change in future. Wilfredson's Limited, trading as Wilfredson's, is an Appointed Representative of New Leaf Distribution Limited, which is authorised and regulated by the Financial Conduct Authority (FRN: 460421).