Pension Calculators: what are they and how can they help you?

Understanding your pension pot and the money you are saving for retirement is mo

Life expectancies are ever-increasing; the average UK male is expected to live to 79.2 years, and the average female to 82.9. Therefore, understanding your pension pot and the money you are saving for retirement is something worth considering. 

It can be hard keeping track of how much money you’ve put towards your retirement, especially if you’ve accumulated numerous pension pots over the years. Add to that the state pension, and you’re left wondering how much that equates to, and whether you’ve paid into any other pots you’ve since forgotten about.

Further, even if you may know how much you have currently saved in your pension pot(s), you’re unlike to know how much it will be worth when you retire. 

That’s where a pension calculator comes in. There are several free tools online that will calculate the amount you’ll need to save for retirement to maintain your current lifestyle, and work out how close you are to that figure. Here Ellis Bates share three options that you can put to the test. 

Money Advice Service

Money Advice Service (MAS) is a free and impartial service set up by the government, to provide advice on all things money-related.

It has an entire section on the website dedicated to planning for retirement, and this includes a pension calculator

The calculator has five steps, that shouldn’t take you any longer than 10 minutes to fill out. Start by inputting your date of birth, gender and the age you’d like to retire at (this can differ from the age you qualify for state pension, which you can find out here). 

You’ll then need to enter your current salary, so that MAS can work out how much you need to save to maintain your lifestyle.

You will also be asked to fill out the total amount in each of your pension pots, including any contributions either you or your employer currently make. MAS will then calculate your pension when you retire, should your contributions remain the same.

It’s easy to see how much of a shortfall or surplus you have, compared to your desired amount. By moving the sliders to adjust payment contributions, you can see how much you’d need to invest each month to reach your target.

MAS’s calculator is quick and easy to use, and provides a great base to plan your retirement.

Aviva

Insurance and savings company Aviva also have a comprehensive retirement section on their website, including their own retirement spending calculator.

Similar to MAS, Aviva’s calculator is slightly more detailed in that it asks several medical questions (height, weight, whether you smoke and any known medical conditions), so it can tailor life expectancy according to your lifestyle and adjust your pension.

Simply fill this out, along with the same details that MAS requests (gender, age, current salary), and Aviva will show you a list of possible outcomes of how much your pension could be worth by retirement age. The outcomes depend on whether you draw your pension out all at once, or take a specific amount out each year.

Like MAS’s calculator, you can then adjust the monthly contributions to see how you can increase your pension over time.

If you already have an Aviva account, then the process is even quicker, as existing pension details will auto-populate.

Whilst the final results page may not be quite as easy to scan-read as MAS’, if you scroll down you will see a similar set of sliders, which will automatically adjust your pension projections.

Nutmeg

Nutmeg is an investment management company that also has an easy-to-use pension calculator

The difference with Nutmeg’s pension calculator as opposed to MAS’s and Aviva’s is that information is inputted on one page only, as opposed to multiple slides. It only takes a couple of minutes to fill out the details (desired annual retirement income, current value of pension pots, age and desired retirement age), and on the right-hand side you’ll see your pension pot increase or decrease depending on those factors.

Nutmeg’s pension calculator may not be as comprehensive as the other two, but it allows a quick insight into what your pension could be worth over time.

Based on the details you provided, Nutmeg will calculate how much your monthly contributions need to be to reach your ideal total, including a graph showing how the value of your pension could grow over time.

Final thoughts

Paying monthly contributions into your pension fund is a great start. It is important to be aware of the total figure you need to save, so you can adjust your payments accordingly.

Using one of the above online pension calculators can help you with this, providing you with details on total figure you need to save and how much you should be putting away each month. That makes it easy for you to start planning ahead.

Whether you want a quick evaluation of your current plan and what you need to save, or a more detailed version, these three examples are all effective pension planners and it is worth testing them out to find which one suits you best. For a more in-depth evaluation of your options, speak to a financial adviser. 

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