Pension Pot Calculator

PoundsShillingsAndPence

HI

At this point I am only interested in the size of the pension pot when I retire (not how much income this pension pot could in theory provide).

I want one where you can change nearly all the information relating to your pension contributions (admin charge, and growth and inflation etc) .

I have tried a few calculators and found one that I liked using on the themoneycalculator website.

Have anyone used this one – it seems very flexable-.does anyone know how reliable this calculator is in its working out of the final closing balance?

Has anyone found a pension calculator they particulary like?

Would welcome any responses

Thanks

AnotherJoe

I dont believe theres any point doing growth and inflation separately, just calculate growth allowing for inflation. eg say you think growth will be 5% and inflation 2%, then use a growth figure of 3%.

That way all your figures will be in today's money. Otherwise you end up in the position of needing to work out what your million in 25 years time is worth today. If you just factor what growth minus inflation is, you've already done that sum.

Regards how "reliable" such a calcuator is, its very simple maths, there's nothing special about a pension compared to any other cumulative savings scheme from that POV and you could create one in a spreadsheet in 5 minutes so I'd be surprised if it wasnt bang on, which isnt really the concern, because it might be true to 100 decimal places but since your figures (or mine or anyone elses) will be no more than guesswork, I wouldnt really worry about its accuracy too much or indeed, at all.

Alexland

I plan for a growth rate of around 2% compound above inflation and fees then because I would like to retire somewhere between 57 and 60 subtract 10 years of missing state pension (circa £85k) and then divide the remaining balance over 35 years of draw down. Some people may say this is overly cautious but it works for me and seems reasonably achievable.

PoundsShillingsAndPence

Thanks for the replies.

Does this mean that if eg. the growth rate is 5% , the inflation rate is 2%, the fee is 1% and the growth period is 10 years this is the same as simply using a growth rate of 2% (5-2-1) over 10 years ? and the final figure given will be the pot in todays money after fees?

Thanks for sharing your plan- I personally do not think it is overly cautious and will be considering this when investigating my best way forward.

The reason i was asking about the calculators is that when I input the same figures to different calculators i get different results for the pot size by a sizeable amount (all pots given in todays money) - this of course could simply be a lack of fully understanding the assumptions . Rather than try to work out why this is the case I would prefer to just pick one calculator that suits me best and that others who have used it consider reliable.

Dox

Reliability depends heavily on the accuracy of the information entered - and recognising that projections are just that: projections. They cannot be accurate because investment returns cannot be predicted ahead of time. The 'knowns' are things like your age, the charges, and when you plan to take your benefits.

If you don't fully understand the assumptions, it is pretty much on a par with picking numbers out of the blue. It really is important that you factor in the charges correctly - it makes a big difference to the final outcome. Does your current pension provider (if you have one) have a calculator on their own website? Most do.

AnotherJoe

PoundsShillingsAndPence wrote: »

Thanks for the replies.

Does this mean that if eg. the growth rate is 5% , the inflation rate is 2%, the fee is 1% and the growth period is 10 years this is the same as simply using a growth rate of 2% (5-2-1) over 10 years ? and the final figure given will be the pot in todays money after fees?

Yes. And it should be the same as a savings calculator where you say that you save £x a year/month at 2% interest. With one proviso on upping contributions to match inflation, see below.

PoundsShillingsAndPence wrote: »

The reason i was asking about the calculators is that when I input the same figures to different calculators i get different results for the pot size by a sizeable amount (all pots given in todays money) - this of course could simply be a lack of fully understanding the assumptions . Rather than try to work out why this is the case I would prefer to just pick one calculator that suits me best and that others who have used it consider reliable.

Several possibilities.
It may be a timing issue, lets say you say you save £1,000 a year. Did that go in on Jan 1, Dec 31 or was it equally invested throughout the year? So ideally you'd want one that did monthly income accumulation. Also how is inflation accounted for, do they knock it off at the end or as you go?
When you say inflation is 3% a year(say) does the calculator assume you increase your savings by that amount each year, or is it a constant input? Which is a point to watch, whilst i think its fine to discount inflation in the way Ive said you should increase your savings to match it otherwise you are really decreasing your savings by that much each year. eg if you put £100 a month away all this year, and all next year, in todays money you are putting away at 3% inflation, £97/month in today's money.
Also, employers matching. Does it add that in?
Last point I can think of, tax. Does the calculator add basic rate tax, higher rate tax, no tax?

Mix all four of those together and i can see why you'd get differences !

Which is why a spreadsheet where you control all the variables and are sure whats in and what isnt, is perhaps the way to go.

PoundsShillingsAndPence

Thanks for the replies they have all been helpful and given me plenty to think about.

Chickereeeee

Fully agree with allowing for inflation in the way described above. much simpler.

I find most 'lifetime/pension' calculators are a bit iffy wrt tax: when paid and at what rate.

C