|
|
|
Calculate your pension requirements |
|
This simple guide can be used to estimate the following. The guide does not take into account any other
retirement planning you have or allow for inflation during retirement.
1. The annual income you will need when you retire.
2. The lump sum needed to provide the income.
3. The monthly savings amount required to create the lump sum.
To calculate the annual income you will need when you retire you need to know the following.
1. When you want to retire.
(example 20 years)
2. What annual income you would need if you could retire today.
(example
£25,000)
3. What the rate of annual average inflation may be between now and retirement.
(example 3.5% p.a.)
Now use this formula
Multiply the amount you would need to retire today by 100% plus the rate of inflation
(example.
£25,000
x 103.5% = £25,875).
If you want to retire in twenty years repeat the calculation another 19 times until you have done this once for ever year before you retire as follows
Year 2 £25,875 x 103.5% equals
£26,780.6
Year 3
£26,780.6 x 103.5% equals £27,717.9
The final answer for this example based on annual average inflation of 3.5% pa over 20 years shows you would need an annual income of £50,000 to have the equivalent of
£25,000 today.
Calculate the lump sum you would need to invest when you retire to provide your required income
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.
(example
£50,000
divided
by 10% and multiplied by 100 = £500,000)
Check how much you need to save monthly to reach the example
target
|
Your age now |
Years to save |
Approximate monthly
savings required to create
£500,000
based on 9% pa
growth |
Target at age 60
|
|
30 |
30 |
£344 |
£500,000 |
|
35 |
25 |
£531 |
£500,000 |
|
40 |
20 |
£842 |
£500,000 |
|
45 |
15 |
£1,454 |
£500,000 |
|
50 |
10 |
£2,845 |
£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. (example
£50,000
divided
by 5% and multiplied by 100 = £1,000,000)
Check how much you need to save monthly to reach the example
target
|
Your age now |
Years to save |
Approximate monthly
savings required to create
£1,000,000
based on 9% pa
growth |
Target at age 60 |
|
30 |
30 |
£670 |
£1,000,000 |
|
35 |
25 |
£1,036 |
£1,000,000 |
|
40 |
20 |
£1,681 |
£1,000,000 |
|
45 |
15 |
£2,905 |
£1,000,000 |
|
50 |
10 |
£5,689 |
£1,000,000 |
To contact us simply complete the
pension
savings enquiry form
or send us
your requirements by
email.
Tell us how much you can afford to save
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 an illustration showing the amount your savings could achieve.
Find out how much you need to save
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.
^
|
|
 |