'What could my retirement look like?'
'Am I saving enough for retirement?'
‘What will my retirement pot be worth when I am 65?’
‘What will be the effect on my retirement pot if I just add an extra £10 per month?’
These are questions that anybody who is serious about their retirement planning would have. In the background of the global pandemic, planning for the future has become even more important and that is where our Pension Calculator can be of great help. The Raindrop Pension Calculator has been developed in consultation with pension experts and helps you estimate the value of your pension pot when you retire.
You can visit the Pension Calculator here to see how much your pot could be worth and plan for your financial future.
To use the Pension Calculator, you only need a few simple details - your age, annual income, the amount you wish to contribute and your goal retirement age. With just these details we can calculate how much your pension could be worth, allowing you to experiment with contribution amounts until you reach your target pension pot. It’s okay if you’re not sure what this is, we can help you work it out.
Pensions are an incredibly tax-efficient method of saving, receiving a 25% government tax top-up for all your contributions. As you can see, we clearly break out the different sections of your pot allowing you to see the significant effect of government tax top-ups as well as compounding interest.
Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in the future.
If you are relying on your pension to provide your income in retirement, it’s important to know how long it could last. Our spending power tool gives you the power to estimate this for yourself. Test different amounts to see what standard of living you could expect and how long for. You can then tailor your pension contributions accordingly. While it is important to cater for inflation a good rule of thumb is to estimate for 80% of your current expenses as you may reduce current expenditure on areas such as mortgages, rent and children living at home. You can use this to make an informed decision to start working towards your retirement goal.
Now that you have a reasonable idea of how long your pot could last, you can see how soon you need to invest to reach your goal. The most valuable benefit you can give your money is time invested, as compounding interest is a time-sensitive effect. Simply put, the sooner you invest in your pension, the more time you allow for the money to earn compounding interest, potentially giving you higher returns. This is why a small delay can have a significant effect on your pension pot value. To see what effect delaying could have on your pot, test different scenarios to ensure you don’t miss out on your retirement goal. Remember that even starting small can still help kickstart potential compounding interest.
Did you know that small increases to your pension contributions for a steady period can have a large impact on your final pot? Throughout your life, your income will likely grow and so could the opportunity to increase your pension contributions. Committing just a little extra each month, when you get a pay rise or a promotion, could pay off significantly once you reach retirement.
We hope you found this guide useful and have a better understanding of how to use the calculator and why it’s important. If you would like to dive deeper into the assumptions behind the Pension Calculator, you can find further details here. We want to ensure that everyone can save for their dream retirement and hope you find the calculator useful in planning for your future goals. Try it for yourself today at tool.myraindrop.co.uk.
Capital at risk. Please note that the value of your pension can go down as well as up. Past performance and forecasts are not necessarily reliable indicators of future returns.
Please also note that tax treatment depends on the individual circumstances of each client and may be subject to change in the future.