Pensions Calculator

What is a pensions calculator?

A pensions calculator is a calculator designed to help people work out what the value of their pension will be, when they have finally retired. The pensions calculator can tell a customer how much they are likely to receive on a monthly basis in retirement, and how much more they need to save to reach their desired retirement target.

How do pensions calculators work?

Pensions calculator are a very complex calculator, and use lot’s of algorithms and historical data to try to accurately predict how much a customer will receive in retirement. Of course there is no guarantee in this market, as annuity rates can rise and fall, and a sudden advancement in the quality of health care could see everyone living an extra 20 years, which would dramatically affect annuity rates.

To use a pensions calculator, you will be asked for your age, the age at which you wish to retire, the amount you earn each year, and what percentage of your salary you and your employer will contribute. They will also ask how much you already have saved in your pension plan.

The calculator will then work out how much that equates to as a pension fund at your age of retirement, based on an average growth of pension fund, and their prediction of annuity rates at that point, based on historical figures.

The calculator will then tell you how much your pension fund will be worth at the point of retirement, and how much that will equate to as an annual, and monthly payment in retirement.

The majority of pensions calculators will also ask you for your desired level of income in retirement, and will then tell you how much more you would need to save to reach that level of income, or how much longer you would have to work before retiring to reach that level of income.

It’s also worth noting that the majority of pensions calculators will not include a state pensions calculator income. The state pension looks set to change in the next few years, but currently pays around £100 a week to everyone in the UK who is eligible to claim for it, on top of any other pension income you may receive. This figure looks set to increase to around £140 a week, and could be more by the time you retire.