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CALCULATE YOUR PENSION REQUIREMENTS |
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The guide is for people who want to save a
regular amount until they retire so they have a
lump sum to invest when they retire to provide
an income. The guide does not take into account
any other pension arrangements or inflation
after retirement. The guide shows you how to
approximate the following:
Annual income you will
need when you retire.
Amount you will need to
invest when you retire to provide income.
The
monthly amount you need to save to achieve your
goal.
To calculate the annual income you will need to retire answer the following questions
You want to retire in
(example - 20 years)
What annual income would you need to retire today taking into account you may not have a mortgage or need to provide for children (example -
£25,000)
What do you you think the annual average rate of inflation will be between now and when you retire
(example -
3.5%)
Using your own answers to
the above questions multiply the amount you would need
to retire today by 100% plus the rate of inflation as shown in the following example.
£25,000 x 103.5% equals £25,875
Now if you plan to retire in twenty years repeat the calculation a further 19 times until you have completed a total of 20 multiplications, one for each year before you retire.
Year 2
£25,875
x
103.5% equals
£26,780.6
Year 3
£26,780.6
x
103.5% equals
£27,717.9
Answer
The final answer in this example
shows
that (if
annual inflation increases by 3.5% pa over the next 20
years)
when you retire you will need an annual income of
£50,000
to have the equivalent of £25,000 today.
Now calculate the size of the pension fund needed to provide the income
Now you know the annual income you need you can work out the lump sum you will need to invest when you retire to give you the income. Simply replace the red
figures in the following examples with your own and do the calculation. You can choose to be a high or low risk investor.
Higher risk investor
expecting 10% growth
A higher risk investor expecting
10% annual growth to provide an annual income of £50,000
must invest £500,000.
Divide
£50,000
by 10% then multiplied by 100
Answer
£500,000
Lower risk investor
expecting 5% growth
A lower risk investor expecting
5% annual growth to provide an annual income of £50,000 must invest £1,000,000
Divide
£50,000
by 5% then multiplied by 100
Answer
£1,000,000
Now check for your age how much you need to save monthly to reach the example targets
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Your age |
Years to save |
Approximate monthly savings needed to achieve target fund assuming 9% pa average investment growth |
Target fund at age 60
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30 |
30 |
£344 |
£500,000 |
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35 |
25 |
£531 |
£500,000 |
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40 |
20 |
£842 |
£500,000 |
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45 |
15 |
£1,454 |
£500,000 |
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50 |
10 |
£2,845 |
£500,000 |
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Your age |
Years to save |
Approximate monthly savings needed to achieve target fund assuming 9% pa average investment growth |
Target fund at age 60
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30 |
30 |
£670 |
£1,000,000 |
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35 |
25 |
£1,036 |
£1,000,000 |
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40 |
20 |
£1,681 |
£1,000,000 |
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45 |
15 |
£2,905 |
£1,000,000 |
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50 |
10 |
£5,689 |
£1,000,000 |
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CONTACT US |
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To contact us please use the
Pension
savings enquiry form
to provide your objectives and personal
financial criteria. Alternatively you
can contact us by
email
or request we
call you.
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Tell us how much you can afford to save |
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If you tell us the amount you can afford to save, how many years you plan to save and if you want to save monthly, quarterly, six monthly or annually we will send you the follow type of illustration.
Savings of £200 per month for eighteen years will give you £90,850. |
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Find out how much you need to save |
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If you tell us the amount you will need to invest to provide a suitable income, how many years you plan to save and if you want to save monthly, quarterly, six monthly or annually we will send you an illustration showing you the regular amount you need to save to achieve your target.. |
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