Pension planning, how much is enough?

Rosey78

Hi All,

I have recently started to pay attention to my pension and I'm trying work out if I'm saving enough.

I'm using a pension calculator app, however I'm not sure if it is using realistic figures?

It is saying I will have a pot of around £540k by the time I'm 55
Using these assumptions..

Investment growth 6.25%
Earnings increase. 3.25%
Inflation. 1.75%
Annual Mgmt chg. 0.70%

Please can someone let me know if these figures look realistic?

My funds are going into Schroder Diversified Growth Fund at the moment, not sure if this is the correct fund to have or not?

hugheskevi

It is saying I will have a pot of around £540k by the time I'm 55

Make sure you are looking at it in today's price terms, not cash terms.

Investment growth 6.25%
Earnings increase. 3.25%
Inflation. 1.75%
Annual Mgmt chg. 0.70%

Please can someone let me know if these figures look realistic?

Investment growth looks about right, assuming you are taking some risk. For sensitivity you might want to look at scenarios with investment returns ranging from about 5-7%.

Earnings looks low - I'd use something more like 4.5-4.7% for the long-run (based on Office for Budgetary Responsibility forecasts).

Inflation looks low - I'd use something more like 2-3.4% for the long-run (based on expected long-run CPI and RPI, but worth noting that market-based estimates of future CPI are rather higher than the 2% target).

AMC looks reasonable.

My funds are going into Schroder Diversified Growth Fund at the moment, not sure if this is the correct fund to have or not?

Depends on personal preferences, especially risk tolerance.

Rosey78

Thanks hugheskevi,

Yes it is in today's price, if I click the inflation button off, it raises to £780k.

The app seems to link all of these assumptions, if I change investment growth to 5% then it changes earnings to 2% and inflation to 0.5% !

Is there a spreadsheet somewhere that I can use to manually do these calculations?