Retirement Planner (Pro) United Kingdom

What the planner joins together

Many retirement tools project a pot and stop, leaving open whether that pot supports the life you want for as long as you need it. This planner runs both phases in one model, so the pot you build and the income you draw are tested against each other.

It is a Pro tool. The full year-by-year schedule across both phases is generated on the server behind the access gate, and the summary figures are returned either way.

The saving phase, month by month

From your current age until you retire, the pot compounds monthly. Each month it earns one twelfth of your annual return and then your contribution is added.

Monthly steps match how a workplace pension behaves, since contributions arrive with every payslip and start growing from the following month. Over a thirty-year saving period the difference from annual compounding on the same contributions is noticeable.

The planner records the balance once a year, so the schedule reads as an annual path. It shows how much the early years count: money contributed in your thirties has decades to compound, and money contributed in your late fifties has very little time.

What the contribution figure should be

The tool treats your monthly contribution as money landing in the pot, so enter the gross amount, not what leaves your current account.

UK pension contributions get tax relief at your marginal rate. Under relief at source, a basic rate taxpayer paying £80 has £100 credited to the pot, with the £20 claimed back by the provider. A higher rate taxpayer claims the extra relief through Self Assessment, which reduces their tax bill rather than adding money to the pension, so it does not increase the pot unless they pay it in.

Employer contributions belong in the figure too. Automatic enrolment sets a minimum total of 8% of qualifying earnings, at least 3% of it from the employer, and many employers pay more. A projection built only on your own payslip deduction can understate the real contribution by half or more.

Two limits apply. The annual allowance is £60,000, and tax-relieved contributions are also limited by your relevant UK earnings. Once you flexibly access a pension, the money purchase annual allowance cuts what you can contribute afterwards to £10,000 a year, which catches people who take a small amount at 55 and keep working and saving.

The drawdown phase, and the access age

At retirement the model reverses. The pot earns its return once a year, your chosen income comes out, and the income rises with inflation each year so its buying power stays roughly level. This continues until the pot runs out or you reach the life expectancy you set. The planner reports the age the income lasts to and any balance left.

The model does not enforce access rules. A pension cannot normally be touched before the normal minimum pension age, which is 55 today and rises to 57 on 6 April 2028. If you enter a retirement age below that, the arithmetic still runs, but it describes something that could not happen. Money for the years before that age has to sit outside the pension, in an ISA or a general investment account, and the planner does not model that split.

The tax the projection ignores

Every figure here is gross. Up to 25% of a pension can normally be taken free of Income Tax, subject to a lump sum allowance of £268,275. The rest is taxed as income when drawn, against the £12,570 personal allowance and then the normal Income Tax bands.

Income drawn from an ISA is not taxable, so a retiree who draws enough from a pension to use the personal allowance and tops up from an ISA can get a much higher net income than one who draws everything from a pension. If your plan uses both, the net position may be better than a gross pension-only projection suggests.

The State Pension sits outside the model

The projection assumes your private pot pays all of your income for the whole of retirement. In practice the State Pension will add to it.

The full new State Pension is £12,547.60 a year. You need 35 qualifying years of National Insurance for the full amount and at least 10 years to get anything. Deferring past State Pension age increases it by 1% for every nine weeks deferred.

For a couple both entitled to the full amount, that is a substantial joint income starting partway through retirement and lasting for life. Leaving it out makes the planner cautious. It also means that if the schedule shows your pot running dry at, say, 84, your income does not stop at 84; it drops to what the State Pension provides. Checking your National Insurance record is worth more than most refinements to the return assumption.

A worked example

Take someone aged 40 with a £50,000 pot, contributing £500 a month and assuming a 5% annual return. Over the 27 years to retirement at 67 they pay in £162,000 on top of the starting pot, and monthly compounding grows the pot to about £533,926.

At retirement they want £25,000 a year, rising by 2.5% a year, until age 90. With the pot still earning 5%, the income lasts the full 23 years and about £333,052 is left at 90. Change one input, such as retiring at 69 or contributing £600, and the result changes immediately.

Building in a margin

The model uses fixed rates for return and inflation, and markets do not. Weak returns in the first years of drawdown, while the pot is largest and you are drawing from it, do damage that later strong years cannot fully repair. A smooth projection cannot show that, so a plan that only just survives on paper is more fragile than it looks.

Plan for a slightly lower return, slightly higher inflation and a longer life than you expect. If the plan still holds under all three, you can rely on it more. Revisit it as your contributions, circumstances and markets change, and for decisions about your actual pension, tax position or State Pension, confirm the figures with a regulated financial adviser who can see your full situation.

This is general information only and not financial advice.

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