Retirement calculator UK
See how much you need to save to meet your goals with our retirement calculator
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A summary of your position at retirement
This is the starting point for our retirement scenarios, your position at retirement. You can view the numbers in today's money (adjusted for inflation) or at retirement age.
Go back to your profile to edit or review your person and pension details, then see your position at retirement
You've met your desired income of in zero scenarios
Middle-of-the-road scenario, with conditions inline with historic averages
MAX INCOME
Investments grow 5%
Inflation is 2%
Life expectancy 88, retiring at
Poor economic conditions, a scenario with zero inflation-adjusted returns
MAX INCOME
Investments grow 3%
Inflation is 2%
Life expectancy 88, retiring at
Long life scenario with life expectancy ten years above the UK average
MAX INCOME
Investments grow 5%
Inflation is 2%
Life expectancy 98, retiring at
Scenario income after tax
This section shows how different types of income, such as the state pension, contribute towards your retirement income in the average conditions scenario.
Below the graph are boxes which summarise the different income types, again after tax, including any remainder at the end if there is a surplus
- Average Income
- Total Income
Detailed scenario breakdownScenario breakdown
This sections shows a more detailed breakdown of your income each year during retirement in the average conditions scenario.
If you have any questions on the calculation or any assumptions used, please first try the FAQs below.
Gross Income is broken down into Fixed Income (Final Salary pensions, State Pensions, and Other Income), Savings, and Defined Contribution pensions
Frequently Asked Questions
The Varbes Retirement Calculator uses your current pensions, savings, and a pension contributions to run different scenarios you could face during retirement to see if you have enough to meet your desired income.
The following assumptions are used to calculate scenario outcomes:
- Between your current age and retirement we assume inflation runs at 2% and investments earn 5%.
- 2% inflation was chosen as this is the UK government’s published long-term target rate, and 5% is a conservative long term returns figure for pensions, based on historic averages.
- The investment rate of 5% is higher than the midpoint investment rate on the results page because typically the returns are higher during your younger years, as pension providers can invest more aggressively, with a long-term investment horizon.
- Assumes Savings are used before pension pots
- Assumes the first 25% of pension pot drawdown is tax free
- Assumes both primary and any partners are both alive for the duration of the scenario life expectancy
- Assumes surplus is added to Savings, and any shortfall is carried forward into later years – if you have a shortfall in some years that is rectified in the future, you will need to reduce your spending at the start.
- Assumes tax bands and state pensions increase with inflation
When displaying figures ‘in today’s money’ everything is adjusted to today’s pricing, so its easy to get a feel for the size of any surplus or shortfall you may have in a scenario, and the value of your income will be at retirement relative to today.
When selecting the numbers as ‘at retirement’ these are the real future monetary values adjusted for inflation. Select this option if you want to better understand and plan what your retirement will look like in terms of real numbers.
If you have a surplus you can carry on with your current plan knowing there is a good chance that you will have money left at the end of retirement to pass on to any inheritors. If this is in a pension pot it will pass to any beneficiaries free of inheritance tax and then be subject to income tax when the funds are drawn down. If you have savings they will be subject to inheritance tax. We use savings as income before pension pots in this calculator as that will typically be the most tax efficient. Being in surplus will allow you to put money aside to meet any unexpected bills or one-off purchases.
If the surplus is significant then you may want to review and adjust your desired income in order to increase your discretionary spend during retirement.
The three scenarios are based on historic averages for UK pension pot and investment returns, government targets for inflation, and life expectancy averages published by the ONS. You can refine each of the scenario settings in the dropdown tab above the scenario summary if you prefer to assess a different set of conditions.
Predicting the future is extremely difficult and small adjustments in the rates can have a huge impact on your retirement plan. These are average rates over potentially a long period of time and clearly variations can occur in the individual years.
If you have a shortfall in one or more of the scenarios then you can work towards reducing it by increasing your pension contributions and/or any savings and investments, or by decreasing your desired income.
Another option is to reduce your desired income in the early years to give yourself more flexibility.
You can adjust the scenario settings in the dropdown tab just above the scenario summary.
Check with your pension provider or employer if it is a company pension– they will be able to confirm the type of pension you have.
The majority of today’s pensions are pension pots (SIPPs - Self-Invested Pension Plan, Defined Contribution pensions) with final salary schemes becoming less common, and low market rates for insurance annuities.
If you are struggling to understand the output then please check out our articles, get in touch with any specific questions, or speak to a financial advisor, who may be able to take you through some of the concepts at a pace suitable for you.
Savings are used before pension pots as they are subject to inheritance tax before being transferred to any beneficiaries at the end of your retirement, whereas pension pots are not subject to inheritance tax but instead to income tax, which in most cases will be lower. It is therefore more tax-efficient, particularly in the situation where a surplus remains at the end of retirement.
This retirement calculator covers the life of the primary retiree (“you”) and where applicable assumes that a Partner is alive during the same period.
In the event that life expectancies differ certain assets and pensions possibly transfer to the remaining person, and there are certain rules in this case which are currently beyond the scope of this calculator. You may want to speak to a financial advisor if you want to better understand what happens in this event.
We use the current tax bands and then increase them with inflation during the scenarios - up to £12,570 is tax free, then up to £50,270 20% tax rate, then up to £150,000 40% tax rate, and 45% above that.
Inflation rate is the annual rate at which general prices change. If inflation is high, then the purchasing power of money decreases over time. The state pension and any inflation-linked other incomes and final salary pensions will automatically increase with inflation within this calculator, along with the tax brackets that are applied to the income.
This is the annual rate of return earned on pension pots, savings and investments. The rate you receive in reality will depend on how you invest and how the market performs.
Savings and Investments, along with the first 25% of pension pots are tax-free, so when they are being used the effective tax rate will be lower. We use the 25% tax-free portion of your pension pots first as this is more tax-efficient.