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Pension Calculators: What are they and which is the best for you?

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In this post we will look to explain what pension calculators are available, how they differ from each other and why you will still need financial advice from an expert like Ellis Bates when planning for your retirement.

Pensions calculators can be a great start before seeking financial advice

With life expectancies ever-increasing, there’s never been a more important time to build up your pension pot. With the average UK male expected to live to 79.2 years, and the average female to 82.9; you’ll want to ensure you have enough money to live comfortably once you’ve retired.

It can be hard keeping track of how much money you’ve put towards your retirement, especially if you’ve accumulated numerous pension pots over the years. Add to that the state pension (which is currently £122.30 a week, subject to criteria), and you’re left wondering how much that equates to, and whether you’ve paid into any other pots you’ve since forgotten about.

Whilst you may know how much you’ve currently saved in your pension pot(s), you’re unlikely to know how much it will be worth when you retire.

That’s where a pension calculator comes in. There are several free tools online, that will calculate the amount you’ll need to save for retirement to maintain your current lifestyle, and work out how close you are to that figure.

We’ve rounded up the top three, that you can put to the test if you want a quick answer. However, we, of course, recommend you seek advice from one of our independent financial advisers, who will be able to help you plan for your retirement.

Money Advice Service

Money Advice Service (MAS) is a free and impartial service set up by the government, to provide advice on all things money-related.

They have an entire section on their website dedicated to planning for retirement, and this includes a pension calculator.

The calculator has 5 steps, that shouldn’t take you any longer than 10 minutes to fill out. Start by inputting your date of birth, gender and the age you’d like to retire at (this can differ from the age you qualify for the state pension, which you can find out here).

You’ll then need to enter your current salary, so that MAS can work out how much you need to save, to maintain your lifestyle.

You’ll then be asked to fill out the total amount in each of your pension pots, including any contributions either you or your employer currently make. MAS will then calculate your pension when you retire, should your contributions remain the same.

It’s easy to see how much of a shortfall or surplus you have, compared to your desired amount. By moving the sliders to adjust payment contributions, you can see how much you’d need to invest each month to reach your target.

MAS’ calculator is quick and easy to use, and provides a great starting point for thinking about your retirement plan.

Aviva

Insurance and savings company Aviva interestingly won’t tell you how much is in your pot, but how much you will have to save based on your spending behaviour.

Similar to MAS, Aviva’s calculator is slightly more detailed in that it asks several medical questions (height, weight, whether you smoke and any known medical conditions), so it can tailor life expectancy according to your lifestyle, and adjust your pension.

Simply fill this out, along with the same details that MAS requests (gender, age, current salary), and Aviva will show you a list of possible outcomes of how much your pension could be worth by retirement age. The outcomes depend on whether you draw your pension out all at once, or take a specific amount out each year.

Like MAS’ calculator, you can then adjust the monthly contributions to see how you can increase your pension over time.

Aviva make clear from the outset that this is rough data only and should not be relied upon to make investment decisions without specialist financial advice.

Nutmeg

Nutmeg is an online investment management company that also has an easy-to-use pension calculator.

The difference with Nutmeg’s pension calculator as opposed to MAS’ and Aviva’s, is that information is input on one page only, as opposed to multiple slides.

It only takes a couple of minutes to fill out the details (desired annual retirement income, current value of pension pots, age and desired retirement age), and on the right-hand side you’ll see your pension pot increase or decrease depending on those factors.

Nutmeg’s pension calculator is not be as comprehensive as the other two, but it allows a quick insight into what your pension could be worth over time. You also wouldn’t get the personalised service and superb account management we at Ellis Bates strive to provide.

Based on your details provided, Nutmeg will calculate how much your monthly contributions need to be, to reach your ideal total; and includes a graph showing how the value of your pension could grow over time. As with the other caluclators this is rough data that should not be used to make investment decisions without expert advice.

Final Thoughts

Paying consistent monthly contributions into your pension fund is a great start. However, to ensure you can maintain a similar lifestyle to what you currently enjoy, it’s crucial you’re aware of the total figure you need to save, so you can adjust your payments accordingly.

Using an online pension calculator can be a great starting point, as it will provide you with a rough guide to that figure, so you’re able to start planning ahead.

Each of the above options will give you a good indication of how much you’ll need to save but to really get the most out your money you need, good honest financial advice from trusted experts. Our pensions advisors can take this information and provide you with solutions to make the most of your retirement planning.

If you have any questions about your financials for the future, or would just like some help with designing a retirement plan, then we’d love to hear from you. We aim to be the UK’s most trusted provider of lifelong financial advice, so you can either find out more about our retirement planning services, or get in touch with us today for more information.

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