Self-employed, what I need to save calculator?

freeisgood

I’m self-employed, I’m 50. 

I’ve been searching all over the Internet for some thing that can show me how much I would need to save up to provide an income being self-employed.

I can’t find any resource even on this website.

I want to know how much I should be putting aside each month,( I know it will be a lot). And what I would be likely to get if I retire in say 18 years time. 

I want to be able to put in my age ,and put in my retirement age ,and how much I can put in per month somewhere, thank you so much.

All help will be gratefully received thank you

Dazed_and_C0nfused

First thing is you will be probably be limited by your earnings, business profits in your case.

How much do you expect your profit to be in the current tax year?

dunstonh

I’ve been searching all over the Internet for some thing that can show me how much I would need to save up to provide an income being self-employed.

Pretty much the same as an employed person except there are no employer contributions.  i.e. if you need to pay 15%, you have to pay the whole 15% and not the difference that an employer would pay.

So, don't search for "self employed" calculators.  It will limit options.

And just in case you are not actually self-employed but a limited company (a lot of people say self employed when they are not), the situation changes with limited companies.

I want to know how much I should be putting aside each month,( I know it will be a lot). And what I would be likely to get if I retire in say 18 years time. 

Retirement calculators are little more than a bunch of assumptions.  You could use 5 different calculators each with different assumptions and get 5 very different outcomes.  .e.g. what rate of inflation are you going to use?  What level of return are you going to use?    How are you going to draw your income in retirement?  What is your tax position in retirement?   Do you need to fund the gap to state pension age or do you plan to retire at or after state pension age?

So, you really need to understand the assumptions when you do use a calculator.  It could totally demoralise with some of them due to their level of pessimism whilst others can be overly optimistic. 

NannaH

You will only ever get an estimate of fund size based on investment returns on any one of dozens of online calculators.
Using a compound interest calculator is probably the easiest option,  keep the growth rate low,  say 2 or 3%. 

 For example, £1000 a month for 15 years at a growth rate of 3% will give you over £250k ( increasing your deposits yearly by 2% for inflation).   That would give you an income of around £7500 a year based on a 3% withdrawal rate,  or you could buy an annuity for a fixed income. 

QrizB

Just to get you started thinking in the right ballpark, it's been said that (if you're just starting to save for retirement) you should be putting away half-your-age percent of your income.

For you, aged 50, that's 25%.

Depending on exactly how much income you want in retirement it could be a bit more or a bit less, but that's the sort of number you'll be looking at.

MX5huggy

I think the Vanguard calculator is as good as any for a starting point.

https://www.vanguardinvestor.co.uk/what-we-offer/personal-pension/pension-calculator

Somebody

The starting question is how much income you need at the time you retire.  What's enough is down to individual circumstances.

The previous posts will give an idea in general term as to how to get there. Then make investments via tax efficient means i.e. maximise pension contributions to obtain the maximum tax relief, then S&S ISAs, etc etc.....

Secret2ndAccount

You are looking at contributing for 18 years then drawing out for, roughly, 18 years. So however much per year you put in, that is roughly how much you can take out per year in retirement. Your pension fund should be invested, so it will grow, but inflation will also increase the amount you need to take out. Hopefully the growth exceeds inflation, so you get ahead. That is important as you might live beyond age 86 (50% of people do).
Check your State Pension. That will pay about 10k/yr all being well. So you need to pay in 10k/yr less than you want to pull out in retirement.
These numbers are all +/- 50% which is as close as any other retirement calculator will get you.
https://www.gov.uk/check-state-pension
You can contribute no more than your profits each year into a pension. Some guestimating may be required as the contributions have to go in long before the tax return stating the profits.
There is an upper limit of 40k/yr. This limit (not the profits limit) can be flexible - using up to 3 previous years' unused allowance provided you had some sort of pension open in those prior years.

JohnWinder

Well, it might be more complicated than you want, but this fellow has gone to town on mapping out retirement savings and spending using a spreadsheet. It includes the feature of updating your position each year, which then offers you a suggestion for the next year's savings.

https://www.bogleheads.org/forum/viewtopic.php?t=264059

anonmoose

I am self employed and I find it helpful to do my accounts monthly and pay into my pension monthly and also put money aside in savings to pay my tax monthly. My income is variable so it stops me overspending.  You can't contribute more than 80% of your net profit if you are self employed, then HMRC add another 20% making 100% max of your net earnings.

First as others have said check your state pension forecast and then work out how much you think you will need in retirement and work back from that. 

I am 10yrs from retirement and I don't account for inflation or growth at the moment forecasting what my pot will do over the next 10 yrs as I don't think investments will do that well over that term and inflation might be high.  So I take the view whatever I am physically saving is what my pot will be. I think most people estimate a modest growth. 

Obviously at the moment my pot is shrinking as stocks are down but I ignore that and just work out what I need to pay in as it should even out over time.  Truth is nobody knows what the investments/inflation will do so it is all guesswork.

So I have a set amount I need to save to bridge the gap before state pension and then a lower amount I need to top up the state pension once I hit that age.

For the bit when I hit state pension I work on a 3.5% drawdown meaning whatever amount in my final pot I can take out 3.5% per year and it be sustainable going forward.  Some people do take more than that but you can read about drawdown and make your own mind up.

But by far and away the most important thing is checking your state pension and then just save as much as you can afford.  You still have plenty of time to save up a decent pot.