How PensionBee’s new pension calculator has made saving simpler
2017 has been the year for sorting out my pension. I have worked for a few big corporate firms and had paid into a pension scheme at two of these companies, both were frozen and very untouchable as I had left their employment. I transferred these pension pots into a new scheme with PensionBee and can now pay into that pension scheme whenever I want. You can read more about the process here. It was such a breath of relief to find out how much money I had and that I could now add to it as and when I wanted but now to I’m self employed; I’ve needed to reach out to PensionBee and their pension pot calculator for some help!
How much do I need in my pension pot?
What is a good size pension pot? I have a pot with £46k in it currently, that sounds okay doesn’t it, £46k of savings? Except it isn’t when you think about what that money will be worth per year once retirement starts. £46k to last for a maybe 20 to 30 years? How do you even begin to work this out? I could set up an ever so complicated spreadsheet with the longest ever formulas or I could use the PensionBee’s new pension pot calculator which has just been launched.
The PensionBee simple pension calculator
It’s as simple as this. It asks you a few questions, all on sliders and then works away in the background and does the maths for you. It’s a fabulous self employed pension calculator tool as well.
How much do I want to receive per year in retirement?
You type in your desired pension amount per year (as a guide it should be around 2/3rds of your current earnings) and then you see a graphic that indicates your projected earnings after you have entered some more information.
There are a series of sliders where you can change information and scenarios to see your pension pot size by age:
- Add in your current age and proposed retirement age
- Next add in the current value of your pension pot
- Add in your personal monthly contribution
- Any one-off contributions you might make before retirement
- Any employer’s monthly contribution
Scenario 1. Early retirement for Mrs Mummypenny
In my first attempt at the calculator, I put in the following
- Current age 40, retirement age 55.
- Current pension pot value £46k
- Personal monthly contributions £200
- One-off contribution of £50,000 via my company.
- Employer contributions zero as I am self-employed.
My desired pension amount is £30,000. And the result including state pension using these factors came out at £19,000. Oh no, quite a gap there.
Scenario 2. Later retirement with a lower annual income
I am going for an older retirement age, with more contributions into my fund from my company, less monthly contributions. And a desired amount of £25,000 per year as by then there will be no mortgage to pay.
- Current age 40, retirement age 60.
- Current pension pot value £46k
- Personal monthly contributions reduced to £100
- One-off contribution of £100,000 via my company.
- Employer contributions zero as I am self-employed.
The result including state pension using these factors came out at £25,216, perfect. I could create many more scenarios but I am happy with this one.
I have the information to proceed, now to put plans into place.
Retirement before the age of 60 sounds amazing. Or to at least reduce my hours and travel the world! But firstly, I need to find £100 per month to start investing in my pension pot. I can do this, particularly once we move to a new house and have a huge reduction in our monthly outgoings but no change to monthly incomings. Plus, all our debt will by then be swallowed into the new mortgage. £100 really isn’t much money to find, particularly now I know that it will contribute towards an annual income of £25k per year.
The one-off contributions should also be okay, given the growth plans I have for Mrs Mummypenny. Pension contributions are actively encouraged by the government, financial planners and accountants as a way to reduce your company tax liability.
Give the calculator a try yourself
Why not give the PensionBee pension pot calculator a try yourself and add in some numbers of your desired retirement age and current size of your pension pot? It might surprise you and will help you answer the big question of how much do I need in my pension pot.
And if you have pots split all over the place from various previous employers why not consolidate them into the one simple place like I did. I feel in so much more control being able to check my pension balance whenever I choose to (not every day!!).
Please be aware that any form of investment can go up and down and you may want to consider advice from a qualified IFA. Just make sure they are recommended by a trusted friend and check their investment levels as some will only work with clients with an investment level of at least £150k. This post was written in collaboration with PensionBee
