Contributing 5K TO pension - HOW MUCH WILL I HAVE IN 30 YEARS

Joey122

Hi All,

Can anyone estimate the following based on contributing 5K a year into a equity investment fun for the next 30 years? And what about instead of 5K I chose 10K each year for the next thirty years.

Assume a return of 6% a year so please lets not talk about whether 6% is fair or justified in todays markets.

1) Value of pension pot after 30 years - At 5K I would have contributed 150K but I dont account for compounding here. What about 10K

2) If i retire at 55, and given the number in Q1, an approximation of what I could get from an annuity

3) If i withdraw 25% of the pension, an approximation of what I could get from an annuity

I know these numbers will be approximations due to variables like rates and growth but please can anyone give me an idea?

Thanks all

dannydandan_2

Hate to state the obvious, but have you tried contacting several of the big pension providers in person. They will be able to give an aproximate estimate. Thats where I'd start first.

EdInvestor

Joey122 wrote: »

1) Value of pension pot after 30 years @ 6% growth p.a and 416 per month contribution would be 407, 371. This ignores tax relief, because the pension is taxed in retirement .

Annuity rates can be checked here:

https://www.fsa.gov.uk/tables

Retired_I.F.A.

£5000 a year at 6% yield for 30 years = £419008. Double that for £10000
Thats yearly in advance investment, monthly or in arrears works out less.
Also note it's a yield, meaning after any/all charges.

As for the annuity rate I suggest you google "annuity rates" and look at the rates available today. There are sites that'll do on line illustrations/quotes. What you'll get depends on the current long term gilt rate less the operating profit/charges of the provider, your age, your sex, any gaurenteed term and any spouses annuity you choose.

Assuming your trying to estimate your pension in 30 years time take these figures with a pinch of salt as the reality is your contributions would escalate in line with your wages and be eroded by inflation as would the final fund value. Thnking you may achieve 6% over inflation as a yield will not be acurate either as wages tend to be higher than inflation and theres no accounting for promotion or unemployment spells let alone a uniform 6% yield.