Calculate real future value of pension, CPI etc

dont_use_vistaprint

I just used this and it makes no sense.

http://www.in2013dollars.com/2019-GBP-in-2039?amount=22000&future_pct=0.02

Assuming 2.0 annual CPI, a 22K pension will not be worth 32K in 20 years it will be worth less!!

CAn anyone please point me to the correct calculator for this please, I dont need NPV or anything complex just a simple tool to do compound CPI estimates on a projected (estimated) annual pension amount that doesn't factor in CPI.

Thanks

Silvertabby

Assuming 2.0 annual CPI, a 22K pension will not be worth 32K in 20 years it will be worth less!!

Are you compounding the increases, or have you just added 20 years x 2% = overall increase of 40%?

ie,

Year 1. £22,000 + 2% = £22,440

Year 2. £22,440 + 2% = £22,888.90

etc, etc.

jonnygee2

The calculatior you are using is probably about correct, however it is a bit confusing / opaque as it seems to be including a growth rate but not telling you what that is.

For simple compounding calculations I normally use this https://www.bankrate.com/calculators/retirement/roi-calculator.aspx . A bit annoying it only shows dollar signs but otherwise it's easy to see the effect of all the variables.

JoeCrystal

To clarify, do you mean how much a £22k pension is worth in twenty years assuming no increase in the pension? Pretty easy to work it out on the spreadsheet. If so, then £22,000 pension today would be worth £14,805 in twenty years, assuming 2% CPI. (£12,181 if it is 3% and £18,030 if it is 1%)

Linton

dont_use_vistaprint wrote: »

I just used this and it makes no sense.

http://www.in2013dollars.com/2019-GBP-in-2039?amount=22000&future_pct=0.02

Assuming 2.0 annual CPI, a 22K pension will not be worth 32K in 20 years it will be worth less!!

CAn anyone please point me to the correct calculator for this please, I dont need NPV or anything complex just a simple tool to do compound CPI estimates on a projected (estimated) annual pension amount that doesn't factor in CPI.

Thanks

It is telling you that you would need £32K dollqars in 20 years time to buy what would now cost you £22K. If you want the other way round set the growth to -2%.

sandsy

22000/(1.02^20) =14805