Hopefully this gives you better insight into what your pension could be worth to you in retirement but if all this does is make you think about your pension a bit more then that's a good start.
This is how to estimate the size of a pension pot given the following assumptions:
Log on to your current/previous pension provider(s) and total the amount from all of them.
Don't worry at this point about the percentage growth rate or strategies in fund changes towards retirement as the calculators are only approximate to give you an idea of what your pension pot could provide you in retirement.
If you don't know or cannot find out what the value of your pension pot is then use a nominal value of £1,000 for the calculations.
Use the calculator at Money Saving Expert
Fill in your Gross Pay (£40,000), and your Pension Contributions (5%) then click `Calculate`
Note your Take Home Pay and Pension Contribution for the month.
Use the calculator at Aviva Retirement Planner
There are a few things to know about the pension calculators.
Enter your DOB (15/5/1984 about 40 years old when this page was made), Gender (there is a slight difference in life expectancy) then click `Next`.
Now enter the details below and then click `Next`
This will show you an estimate of what your pension could be worth and in this case, it's £147,000.
In this example the figures show that a yearly pension of £24,000 would last 9 years until the age of 77. However, the life expectancy is 88, so after 77 years old, only the state pension would be available.
Try changing the target income until the income drawdown and Life Expectancy lines line up. Start by reducing the Lump Sum to £0.
You can align the values by changing the income to £20,000 with £0 Lump Sum.
There are options to take your pension in other ways, Annuity or Withdraw All, so switch to these to see the returns.
There are additioanl calculators to try on the Additional information about Pensions page.
Now you can do the same again but change the 2 values that you can control.
First increase your pension contribution to 10% and run the 2 calculators again. You will find that although your Take Home Pay has changed from £2,560 to £2,427 per month, a £133 difference, the pension contribution has increased from £167 to £333, a £166 difference, which is due to tax relief.
Putting the 10% in the pension calculator the pension pot is now worth £238,000 and changing the income target until the lines line up gives £26,000 per year.
Secondly try changing the Salary to a realistic value either through promotion or seeking a new job. This is personal to your own abilities and needs, so I won't guess at values here to use in the calculations.
Ultimately it's up to you to figure out what's best for your situation, and there are actual financial advisors you can talk to.
The table below shows a summary of different pension contributions.
| Pension contribution | 5% | 10% | 15% |
|---|---|---|---|
| Take Home Pay | £2,560 | £2,427 | £2,293 |
| Pension Contribution Per Month | £167 | £333 | £500 |
| Total Contribution Over 28 Years | £56,112 | £111,888 | £168,000 |
| Earnings Over 28 Years | £90,888 | £126,112 | £162,000 |
| Pension Pot | £147,000 | £238,000 | £330,000 |
| Pension Income | £20,000 | £26,000 | £31,000 |
You will now spend countless hours calculating and recalculating based on different amounts to get an idea of where you could be in retirement.
Happy calculating
Check out the Additional Information about Pensions page for more useful resources.
