Pension Calculator
Last updated: 27 June 2026
Reviewed by Gavin Meiring, Lead research and primary author · Doctoral Candidate (Corporate Governance) · Research and drafting assisted by AI
- The modern state pension was invented by German Chancellor Otto von Bismarck, who introduced old-age insurance in 1889 — paying workers a pension from age 70, at a time when few people lived that long.
- America's first private pension plan was created in 1875 by the American Express Company, followed by railroads and utilities — decades before the US Social Security Act of 1935.
- Britain's state pension arrived with the Old Age Pensions Act of 1908, paying a maximum of 5 shillings a week from age 70 — a retirement age set when life expectancy at birth in Britain was under 50.
Pension Calculator
A pension calculator estimates the size of your pension pot at retirement and the annual income it could provide, based on your current savings, planned contributions, expected returns, and target retirement age. It is used by workers of all ages who want to understand whether they are on track for a comfortable retirement.
How to Use the Pension Calculator
- Enter your current pension pot value and your age.
- Enter your planned monthly or annual contributions, including any employer contributions.
- Enter your expected annual investment return and your target retirement age.
- The calculator projects your pension pot at retirement using compound growth.
- It then estimates the annual income this pot could support, using either an annuity rate or a sustainable withdrawal rate such as 4%.
The Formula
Pension Pot at Retirement = Current Value x (1 + r)^n + Monthly Contribution x [((1 + r)^n - 1) / r]
Where r is the monthly growth rate (annual return divided by 12) and n is the number of months until retirement. The first term compounds your existing savings. The second term compounds your future contributions.
Annual Retirement Income = Pension Pot x Withdrawal Rate (typically 4%)
Real-World Example
You are 35 years old with £30,000 in your pension. You contribute £400 per month and your employer adds £200, giving a total contribution of £600 per month. You plan to retire at 65. You assume a net annual return of 6%.
Monthly rate = 6% / 12 = 0.5%. Months to retirement = 30 years x 12 = 360 months.
Growth of existing pot = £30,000 x (1.005)^360 = £30,000 x 6.023 = £180,690. Growth of contributions = £600 x [((1.005)^360 - 1) / 0.005] = £600 x 1,004.5 = £602,700.
Total pension pot = £180,690 + £602,700 = £783,390.
At a 4% withdrawal rate, this supports an annual income of approximately £31,336. Add the State Pension (currently approximately £11,500 per year in the UK) for a combined retirement income of around £42,800.
How Much Is Enough?
The appropriate pension pot size depends on your retirement lifestyle expectations, other income sources, and how long you expect to live. A commonly cited rule of thumb in the UK is that you need a pension pot of roughly 20 to 25 times your desired annual income from the pot. For an income of £25,000 per year from your pension, that implies a pot of £500,000 to £625,000. The Pensions and Lifetime Savings Association publishes annual figures for what a minimum, moderate, and comfortable retirement costs, which provide useful real-world benchmarks.
Frequently Asked Questions
How much should I contribute to my pension? A general starting point is to save at least half your age as a percentage of salary, so a 30-year-old should aim to save at least 15% of salary including employer contributions. The earlier you start, the less you need to save each year due to the power of compounding.
What investment return should I use? A commonly used real (after inflation) return assumption for a balanced pension portfolio is 3-5% per year. Using a more conservative rate produces a more cautious projection. Many pension providers present projections at low, medium, and high return scenarios.
Does the State Pension count towards my retirement income? Yes. The full new UK State Pension is approximately £11,500 per year and is available from age 67 for most workers. You need at least 35 qualifying years of National Insurance contributions to receive the full amount.
When should I start taking money from my pension? Under current UK rules, you can access your pension from age 55 (rising to 57 in 2028). Delaying drawdown allows your pot to continue growing. Taking income flexibly through drawdown rather than buying an annuity requires ongoing investment management and sequencing-of-returns risk planning.
The same saver at five retirement ages
Hold every input in the page's example steady, the 35-year-old with £30,000 already saved and £600 a month going in, and move only the retirement age. The monthly growth rate stays at 0.5 percent, which is the 6 percent annual return divided by twelve.
| Retirement age | Years of contributions | Months | Projected pot | Income at a 4% withdrawal rate |
|---|---|---|---|---|
| 55 | 20 | 240 | £376,531 | £15,061 |
| 60 | 25 | 300 | £549,745 | £21,990 |
| 65 | 30 | 360 | £783,386 | £31,335 |
| 68 | 33 | 396 | £961,065 | £38,443 |
| 70 | 35 | 420 | £1,098,533 | £43,941 |
The pot at 65 rounds to the £783,390 the page prints. The difference is £4 in a pot of more than three quarters of a million pounds, which is the page's own rounding of the two terms that make up the total.
What the last five working years add
The jump between the last rows is larger than the contributions going in, which is the compounding working in the saver's favour.
| Period | Contributions paid | Growth in the pot | Total pot gain |
|---|---|---|---|
| 55 to 60 | £36,000 | £137,215 | £173,215 |
| 60 to 65 | £36,000 | £197,641 | £233,641 |
| 65 to 70 | £36,000 | £279,146 | £315,146 |
Five extra years at 65 pays in £36,000 and adds £315,146 to the pot. To put the same point another way, the final five years are worth more than the first twenty, because the pot those contributions sit on is so much larger.
Where the page's pot comes from
The page divides its total into two terms, and both can be recomputed from its own inputs. The existing £30,000 grows at 0.5 percent a month for 360 months and reaches £180,677. The £600 a month accumulates through an annuity factor of 1,004.5150, which gives £602,709. The two terms add to £783,386.
The page prints £180,690 and £602,700 for the same two terms. Each printed figure is within about £13 of the value its own inputs produce, and the printed total of £783,390 is £4 above the computed total. The worked sections below use the page's printed total where they build on the example, and the computed figures where they rebuild it from the inputs.
The withdrawal rate against the same pot
The page uses a 4 percent withdrawal rate and gets about £31,336 a year. The rate is an assumption, not a rule, and moving it changes the income more than most readers expect.
| Withdrawal rate | Annual income from the page's £783,390 |
|---|---|
| 3.0% | £23,502 |
| 3.5% | £27,419 |
| 4.0% | £31,336 |
| 4.5% | £35,253 |
Adding the State Pension figure the page quotes, about £11,500 a year, gives £42,836 on a 4 percent withdrawal. The page prints around £42,800 for the same sum.
Starting ten years later
The same £600 a month from age 45 to 65, with nothing saved at the start, reaches £277,225. That is 35 percent of what the 35-year-old ends up with. Add the £30,000 starting pot and the 45-year-old reaches £376,531, which is the same figure the 35-year-old would have at 55.
Starting at 25 with the same £30,000 and the same £600 a month reaches £1,523,618 at 65, about 1.9 times the 35-year-old's pot. Ten years of extra contributions and their growth nearly doubles the final total, and no part of that comes from contributing more each month.
How much of the pot is money paid in
Split each scenario into money paid in and investment growth, and the growth share rises with the length of the run.
| Scenario | Paid in | Pot at 65 | Growth | Growth as a share of the pot |
|---|---|---|---|---|
| Start at 45, nothing saved | £144,000 | £277,225 | £133,225 | 48.1% |
| Start at 45 with £30,000 | £174,000 | £376,531 | £202,531 | 53.8% |
| Start at 35 with £30,000 | £246,000 | £783,386 | £537,386 | 68.6% |
| Start at 25 with £30,000 | £318,000 | £1,523,618 | £1,205,618 | 79.1% |
On the page's own printed total of £783,390, money paid in accounts for £246,000 and growth for £537,390. Two pounds in every three of the final pot were earned by the investments rather than contributed by the saver.
What a lower return assumption does
The 6 percent return is the single most powerful input after the contribution itself, and the page notes that many providers run projections at more than one rate.
| Annual net return | Pot at 65 | Income at 4% |
|---|---|---|
| 3% | £423,347 | £16,934 |
| 4% | £515,835 | £20,633 |
| 5% | £633,388 | £25,336 |
| 6% | £783,386 | £31,335 |
Dropping the assumption from 6 percent to 4 percent cuts the pot by £267,552, or 34 percent, on identical contributions. Nothing about the saver's behaviour changed. That sensitivity is the reason a projection is a range rather than a number, and the reason the page's 3 to 5 percent real return band produces such different outcomes.
The contribution an empty pot would need
Reaching the page's £783,390 from a standing start over 360 months at 6 percent needs £779.87 a month. The page's saver pays £600 and starts with £30,000, so the head start is doing about £180 a month of the work. That comparison is the quickest way to see what an existing pot is worth in monthly terms, and it is how a saver catching up late can work out what the shortfall costs per month.
Assumptions behind the projected pot
Every figure above inherits the assumptions already on the page, and a reader comparing two projections needs them to match.
- Contributions are paid at the end of each month and grow at the same monthly rate throughout.
- The return is a single fixed rate. Real markets deliver a different sequence each year, and the order of returns matters once money starts coming out.
- No charges are deducted. An annual platform or fund charge of one percent comes straight off the return before anything else is applied.
- Contributions stay flat. The page's saver does not raise the £600 with salary, so a real saver who escalates contributions will beat these projections.
- Inflation is not modelled. The pot is a future cash figure, and its purchasing power depends on prices at the time.
- The state pension is added as a separate sum and is not assumed to change between now and retirement.
A three-line check on any projection
- Confirm the return is net of charges. A gross 6 percent with a 1 percent charge behaves like a net 5 percent, which is the £633,388 row above.
- Confirm the contribution figure includes the employer's part. On the page's example the employer adds £200 of the £600.
- Confirm the retirement age used in the projection is the age the money actually starts coming out, not the age the saver stops working.
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