In Today's Terms

dubaiscot

Sorry for all the questions today - my pension offers a look ahead forcast of a monthly income and lump sum for when I retire in approx 30 years time.

The figures quoted are referred to as "in today's terms". What does this mean? Does this mean that the figure quoted is an indication of what the monthly income would be in today's money, or the equivalent of today's money in 30 years?

I hope I have been able to explain myself clearly.

dunstonh

The figures quoted are referred to as "in today's terms". What does this mean?

It means they have used a growth rate and deducted a percentage to cover inflation to give you a figure that in todays money.

In other words, if it says £10k a year it means £10k with todays spending power. It may actually be £20k in future money but it will only have the buying power of £10k.

davidlee

Because when the calculation is made, it involves the value at that time, although the actual return from it may not occur immedietely.

Retired_I.F.A.

davidlee wrote: »

Because when the calculation is made, it involves the value at that time, although the actual return from it may not occur immedietely.

Eh ??? Trust a yank to talk double dutch

bigbloke45

It means that they have made an assumption as to how much your fund will grow by and another as to how much that future value will be eroded by inflation. The resultant amount is called "in today's terms".

It's purely "compound interest" and bears no resemblance to what will actually happen. Buy yourself a financial calculator and play around with it and you'll soon be an expert!