Finance calculators

Retirement calculator

Projected pension pot, sustainable income in today's money, shortfall against your target and the extra saving needed.

Inputs

Current ageRetirement agePlan to ageCurrent savingsAnnual contributionContribution growth%/yrReturn before retirement%Return in retirement%Inflation%Desired income (today's money)

Results

Methodology

Conventions

Contributions are paid at the end of each working year and grow at the contribution growth rate.
In retirement a level income in today's money is drawn at the start of each year until life expectancy, rising with inflation in cash terms.
The required balance and shortfall are in cash terms at the retirement date.
Today's money means deflated by the inflation rate π back to now.

References

Kellison, The Theory of Interest, ch. 3 and 5

Formulas

Real return: \rho = \frac{1 + r_{\text{after}}}{1 + \pi} - 1
Sustainable income: W = \frac{B_{\text{real}}}{\ddot a_{N}},\quad \ddot a_N = \frac{1 - (1 + \rho)^{-N}}{\rho}(1 + \rho)
Required balance: B^{*} = D \cdot \ddot a_N \cdot (1 + \pi)^{Y}
Extra contribution: \Delta C = \frac{B^{*} - B}{\sum_{k=1}^{Y} (1 + g)^{k-1} (1 + r_{\text{before}})^{Y-k}}

Returns and inflation are constant assumptions, not forecasts. Real outcomes vary with markets, fees and taxes.