Enter your age, the age you plan to retire, what you have saved so far, what you pay in each month and the return you expect. You get the pot you could have at retirement, its value in today’s money and the monthly income it could pay. Give an income to aim for and you also get the pot it needs and the monthly payment that would build it. It works for any long-term savings, such as a personal pension, a workplace pension or an ISA. It is a projection on your own assumptions, not a forecast.
Your ages, savings and payments
The years of saving are your retirement age less your age today. Payments are taken to be made at the end of each month. Include anything your employer pays in. If you pay into a personal or stakeholder pension, tick tax relief at source: you pay £80 and your provider adds £20 of basic-rate relief, so £100 goes in. Relief is added only to what you pay yourself, so when you tick it, enter your own payment alone.
Return and charges
Enter the yearly return you expect before charges, then the yearly charges taken from the pot. The calculator uses the return after charges, (1 + return) × (1 − charges) − 1, as an equivalent monthly rate, so a full year gives exactly that return.
Assumptions
You can raise your payments each year, for example in line with your pay. Inflation turns the figures into today’s money: left blank, it is the Bank of England’s 2% target. The years of income say how long you plan to draw on the pot.
The result
Amounts are rounded to the nearest penny, with a half penny rounded up. The pot is your savings plus your payments, each with its growth; the growth is what is left once your savings, payments and tax relief are taken out, so the rows add up to the penny. Copy the workings, export them as a CSV file or save them to Priostack.
Return after charges: g = (1 + return) × (1 − charges) − 1; monthly rate i = (1 + g)^(1/12) − 1.
Savings you have now: S × (1 + g)^n over n years.
Payments: each monthly payment grows at i until you retire; in year k it is P × (1 + increase)^k, rounded to the penny, and × 100 ÷ (100 − 20) with relief at source.
In today’s money: pot ÷ (1 + inflation)^n.
Monthly income for N years, in today’s money: R = K × j ÷ (1 − (1 + j)^−12N), with j = ((1 + g) ÷ (1 + inflation))^(1/12) − 1 (R = K ÷ 12N when j = 0).
Pot needed for an income T: T × (1 − (1 + j)^−12N) ÷ j, multiplied by (1 + inflation)^n.
Monthly payment needed: (pot needed − your savings grown) ÷ F, where F is what £1 going in each month is worth at retirement, then × (100 − 20) ÷ 100 with relief at source.
Example: aged 35, retiring at 67, £10,000 saved and £160 a month into a personal pension
With relief at source, £200 a month goes in. At a 5% return and 0.5% charges, the return after charges is 4.475%. Over 32 years you pay £61,440.00 and tax relief adds £15,360.00; your £10,000 grows to £40,587.86 and your payments to £167,384.69, a pot of £207,972.55 at 67. With 2% inflation that is £110,357.16 in today’s money, enough for £489.54 a month in today’s money for 25 years. To aim for £1,000 a month you would need £424,836.41 at 67, so £367.30 a month from you instead of £160.
