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Retirement Calculator

Plan your retirement savings and estimate future income needs

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Retirement Calculator: Savings Projection and Planning

Table of Contents - Retirement

How to Use This Calculator - Retirement

Enter your Current Age and Target Retirement Age.

Enter your Current Retirement Savings (total across all accounts).

Enter your Annual Contribution (combined personal and employer contributions).

Enter your Expected Rate of Return as an annual percentage. Use real (after-inflation) returns for inflation-adjusted results.

Enter any Other Retirement Income (State Pension, defined benefit pensions, rental income).

Select your Withdrawal Rate (4% is traditional; 3.5% is more conservative).

Click "Calculate" to see results. The output displays:

  • Projected portfolio at retirement
  • Annual withdrawal amount
  • Total retirement income (withdrawals plus other income)
  • Savings gap analysis if target isn't met

The Core Principle: Compound Growth

Retirement savings grow through compounding—earning returns on your returns over time.

Future value formula: FV = P(1 + r)^t + PMT × [((1 + r)^t - 1) / r]

Where:

  • P = current savings (principal)
  • r = annual return rate
  • t = years until retirement
  • PMT = annual contribution

Withdrawal calculation (4% rule): Annual Withdrawal = Portfolio × 0.04

The 4% rule aims for 30-year sustainability—withdrawing 4% initially, then adjusting for inflation annually.

Savings target: Target = (Annual Need - Other Income) × 25

Multiplying by 25 is the inverse of 4%. If you need £40,000/year and have £10,000 in State Pension: Target = (40,000 - 10,000) × 25 = £750,000

How to Calculate Retirement Projections Manually

Example scenario: Age 45, retirement at 67 (22 years) Current savings: £150,000 Annual contribution: £12,000 Real return: 4%

Step 1: Future value of current savings FV = £150,000 × (1.04)^22 FV = £150,000 × 2.370 = £355,500

Step 2: Future value of contributions FV = £12,000 × [(1.04^22 - 1) / 0.04] FV = £12,000 × [1.370 / 0.04] FV = £12,000 × 34.25 = £411,000

Step 3: Total portfolio £355,500 + £411,000 = £766,500

Step 4: Annual withdrawal (4% rule) £766,500 × 0.04 = £30,660

Step 5: Add State Pension (assume £11,000) Total retirement income = £30,660 + £11,000 = £41,660/year

Real-World Applications

Retirement readiness check. Are your current savings and contributions sufficient for your retirement goals?

What-if scenarios. How does retiring 3 years later or saving £200 more per month change outcomes?

Gap analysis. If projections fall short, calculate the additional savings needed to reach your target.

Employer pension optimization. Understand how increasing contributions to capture full employer match affects retirement outcomes.

Early retirement planning. Model scenarios for retiring before State Pension age begins.

Drawdown strategy. Plan withdrawal rates that balance income needs with portfolio longevity.

Scenarios People Actually Run Into

The State Pension timing gap. You retire at 60, but State Pension starts at 67. You need 7 years of living expenses from savings alone.

The employer match opportunity. Your employer matches 5% but you're only contributing 3%. The "free money" of full matching dramatically improves outcomes.

The late-start challenge. Starting at 45 instead of 25 means missing 20 years of compounding. Higher contributions are essential.

The sequence of returns risk. A market crash in your first retirement years depletes your portfolio faster than the same crash occurring later.

The lifestyle inflation problem. Income grew 50% but expenses grew 100%. Savings rate declined despite higher earnings.

Trade-Offs and Decisions People Underestimate

Real versus nominal returns. A 7% nominal return with 3% inflation is only 4% real growth. Use real returns for planning.

4% versus 3.5% withdrawal. The original 4% rule assumed 30 years. For early retirement or longer life expectancy, 3.5% is safer.

Risk tolerance evolution. Higher returns require higher risk. As you approach retirement, shifting to lower-risk investments may reduce projected returns.

Tax wrapper efficiency. Pension contributions are tax-advantaged. ISA withdrawals are tax-free. Optimizing across accounts matters.

Working longer versus saving more. Each additional year of work adds contributions, extends growth, and reduces withdrawal years—triple benefit.

Common Mistakes and How to Recover

Using nominal returns for planning. A 7% projection looks great until inflation halves your purchasing power. Use 4-5% real returns.

Ignoring fees. A 1% annual fee reduces your final portfolio by 20-30% over 30 years. Minimize investment fees.

Underestimating expenses. Healthcare, travel, and home maintenance often exceed expectations. Plan for higher expenses.

Relying solely on State Pension. State Pension replaces only a portion of income. Personal savings are essential for comfortable retirement.

Starting too late. Compound growth needs time. Starting at 40 versus 25 requires roughly double the monthly savings for the same outcome.

Related Topics

State Pension forecast. Government websites provide personalized State Pension estimates based on your contribution history.

Defined benefit versus defined contribution. Final salary pensions guarantee income; DC pensions depend on investment returns.

SIPP and ISA optimization. Tax-advantaged accounts with different contribution limits and tax treatment.

Annuities. Converting a lump sum to guaranteed lifetime income, trading growth potential for certainty.

Sustainable withdrawal rates. Research on how much you can safely withdraw without depleting savings over various time horizons.

How This Calculator Works

Future value of current savings:

FV_principal = currentSavings × (1 + returnRate)^yearsToRetirement

Future value of contributions:

FV_contributions = annualContribution × [((1 + returnRate)^years - 1) / returnRate]

Total portfolio:

totalPortfolio = FV_principal + FV_contributions

Annual withdrawal:

annualWithdrawal = totalPortfolio × withdrawalRate

Total retirement income:

totalIncome = annualWithdrawal + otherIncome

Savings target:

target = (requiredIncome - otherIncome) / withdrawalRate

All calculations happen locally in your browser.

FAQs

What is a realistic rate of return to use?

For long-term planning, use 4-5% real return (after inflation) for a balanced portfolio. This assumes roughly 60% stocks, 40% bonds, minus 2.5% inflation.

How do I account for State Pension?

Enter your estimated State Pension as "Other Annual Income." Get your forecast from the government website for accuracy.

Is the 4% rule too aggressive?

For UK retirees, 3.5% may be safer, especially for early retirement, high healthcare needs, or UK-focused portfolios.

Should I include home equity in retirement savings?

Generally no—unless you plan to downsize or use equity release. Your primary home is a lifestyle asset, not liquid savings.

How does tax affect retirement income?

Pension withdrawals (beyond 25% tax-free) are taxed as income. ISA withdrawals are tax-free. Model net income based on your situation.

Can I use this for early retirement planning?

Yes. Set "Other Income" to £0 until State Pension age. Use a conservative withdrawal rate (3-3.5%) for longer retirement periods.

How often should I update my plan?

Annually, or when significant changes occur (job change, inheritance, market shift). Your plan should evolve with your life.

What if my portfolio is mostly in a workplace pension?

Treat it like any investment portfolio. Enter the balance as current savings and model it using appropriate return assumptions.

How does inflation affect retirement planning?

Inflation erodes purchasing power. Using real returns (after inflation) ensures your projections represent actual purchasing power, not inflated nominal values.

Should I include Social Security or State Pension?

Yes—include any guaranteed income sources. This reduces the amount you need from investments and provides a safety floor.

What is sequence of returns risk?

Poor returns early in retirement deplete your portfolio faster than the same poor returns later. This is why conservative withdrawal rates and diversification matter.

How do I account for healthcare costs?

Healthcare expenses often increase with age. Build in higher expense assumptions for later retirement years, especially in countries without universal healthcare.

What's the difference between accumulation and decumulation?

Accumulation is the saving phase; decumulation is spending down your savings. Different strategies apply—growth focus during accumulation, preservation and income during decumulation.

Should I use a financial advisor?

For complex situations (multiple income sources, estate planning, tax optimization), professional advice may be valuable. For simple cases, calculators and self-education suffice.

What is a safe withdrawal rate?

The percentage you can withdraw annually with high confidence of not running out of money over your retirement. 4% is traditional for 30 years; 3-3.5% for longer or more conservative planning.

How do I plan for variable expenses in retirement?

Build in phases: higher spending early (travel, activities), moderate middle years, and potentially higher costs later (healthcare). Model different spending patterns.

What is the "retirement smile"?

Spending pattern showing higher expenses early (active years), lower in middle retirement, then higher again late (healthcare). Plan accordingly rather than assuming flat expenses.

How does part-time work in retirement affect planning?

Even modest income ($10K-20K/year) significantly reduces required portfolio withdrawals, extending portfolio life and increasing sustainability.

What about leaving an inheritance?

If you want to leave wealth to heirs, factor this into your target. Spend less than sustainable withdrawal rates, or plan for portfolio preservation rather than depletion.

Additional Notes

Retirement planning combines mathematics with life planning. The numbers provide guidance, but personal factors—health, family, interests, and values—shape the final decision. Start planning early to benefit from compound growth, but know that it's never too late to improve your situation.

Review your plan annually, adjust for life changes, and remember that retirement is a transition to be embraced, not just a financial problem to be solved. The goal is a fulfilling life, with finances as a means to that end.

Practical Tips for Success

Automate your savings so they happen before you see the money. Maximize employer matching—it's free money. Diversify across asset classes and tax treatments (traditional, Roth, taxable). Avoid checking your portfolio daily—long-term trends matter more than short-term fluctuations. Plan for multiple scenarios and build flexibility into your approach.

Understanding Uncertainty

Retirement planning involves significant uncertainty: investment returns, inflation, lifespan, health costs, tax policy, and personal circumstances all vary. Plan for multiple scenarios rather than assuming a single outcome. Build buffers and flexibility into your plan. Update your projections regularly as conditions change. The goal isn't to predict the future perfectly but to be prepared for a range of outcomes.

Retirement planning is a journey, not a destination. Start early, save consistently, and adjust as life evolves. The calculations provide guidance, but flexibility and adaptability matter most. Your future self will thank you for the planning you do today. Start planning today. Small actions compound over time into significant results. Your retirement security is built one decision at a time. Retirement planning rewards those who start early and stay consistent. Use these projections to guide your savings strategy and monitor progress. Financial security in retirement is built through consistent planning and saving over time. Start today. Small steps add up to big results over time. Your future self will thank your present planning efforts.