Retirement Income Calculator

Calculate the pension pot you need to achieve your desired retirement income

Input Parameters
£
%
Percentage of pension pot withdrawn each year
How long you expect to rely on your pension
%
Expected average inflation during retirement
%
Expected return on remaining pension investments
Pension Pot Visualization

Required Pension Pot

£750,000

This is the estimated pension pot needed to provide your target income.

Yearly Breakdown
Year Starting Balance Income Withdrawn Investment Growth Ending Balance
Understanding Retirement Income Planning
What is a Pension Drawdown?

Pension drawdown is a way of using your pension pot to provide you with a regular retirement income by reinvesting it in funds specifically designed and managed for this purpose. The income you receive will vary depending on the fund's performance.

The Calculation

This calculator uses a combination of factors to determine the pension pot needed:

  • Your target annual income
  • The percentage you plan to withdraw each year
  • How long you need the income to last
  • Expected inflation rate
  • Expected investment returns on the remaining balance
Key Considerations for Retirement Planning
  • Longevity Risk: The possibility of outliving your savings
  • Inflation Risk: The purchasing power of your income decreasing over time
  • Investment Risk: The uncertainty of investment returns
  • Withdrawal Rate: The sustainable percentage you can withdraw annually
The 4% Rule

The 4% rule is a guideline for retirement withdrawals. It suggests that retirees can withdraw 4% of their initial retirement savings, adjusted for inflation each year, with a high probability of not running out of money for at least 30 years.

However, this rule should be used as a starting point rather than a strict rule, as individual circumstances vary.

Adjusting Your Plan

Retirement planning isn't a one-time calculation. It's important to regularly review and adjust your plan based on actual investment performance, changes in your spending needs, and updates to your life expectancy. Consider consulting with a financial advisor for personalized advice.

Factors That Affect Your Required Pension Pot
  1. Lifestyle choices: Your desired standard of living in retirement
  2. Health considerations: Potential healthcare costs as you age
  3. Housing situation: Whether you'll have mortgage payments or rent
  4. Other income sources: State pension, rental income, part-time work
  5. Tax implications: How your withdrawals will be taxed
Tips for Building Your Pension Pot
  • Start saving as early as possible to benefit from compound growth
  • Maximize employer contributions to workplace pensions
  • Consider tax-efficient savings vehicles like ISAs alongside pensions
  • Regularly review and adjust your investment strategy
  • Consolidate multiple pension pots to reduce fees and simplify management
  • Consider delaying retirement to increase your savings period