Retirement saving: Using a pension calculator
Retirement age is a turning point in anyone's life. Upon approaching it, a sign of good reason would be to do all necessary to maximise one's post-retirement earnings as an indispensable precondition for a peaceful, secure and predictable life.
A starting point toward this goal is the pension calculator. Being a snapshot of your current pension fund status, you can see what monthly payments your existing plan will bring you.
By comparing it with alternative pension plans, you can figure out whether you should stay with your existing provider or should migrate to another. On the other hand, if happy with your pension fund but would like to increase your desired income, you can figure out how much more you need to contribute to get it. Either way, you are to make an important financial decision.
To get an accurate picture, you have to be as precise as possible. Hence, be prepared to enter detailed information about yourself. Your age and retirement age, your existing salary, existing savings, current monthly contributions, pension fund rate of return are just a few of the figures you need to crunch to get an idea about your current situation. A calculator estimating how much more you need to pay to attain your desired situation will require that you also enter your desired income.
With or without Cash Now
Your decision whether to draw cash from your pension fund or not upon retirement is also an important factor influencing the size of your pension. Most pension providers will advise you against taking out money because it will strip you off a larger interest-generating money base and a quarter to half of the monthly income you would have otherwise received.
The Pension Credit Calculator at GOV.UK, as served by the governmental Pension State Service, is a 10-step process which will request quite a few details from you but is certain to yield an accurate calculation of your current status. Take advantage of the help texts to be sure that you have entered the information correctly.
If you would prefer to double check your pension income estimates, then the Money Advice Service is just what you need. Here, in the domain of calculators of all types, you will enter analogous details and are to come with a veritable benchmark of a your existing pension income status quo. What is more, you can couple your pension estimates with results from, say, the budget calculator. This will be especially handy if you want to raise your pension income and have to increase the monthly contributions to your pension fund.
The information on this page is designed to help you understand more and make more informed choices. We do not receive any commissions, instead we are funded from companies that we advertise on our website.