There are many ways to plan ahead for your retirement, but perhaps the most important consideration is making sure that your pension income lasts as long as you do. There is really no delicate way to say this but you need to make sure that your pension continues to provide you with an income at least until the year in which, in the word’s of Monty Python’s famous Dead Parrot Sketch, you ‘shuffle off this mortal coil’ (watch the sketch here for a bit of light relief). Our Drawdown Pension Calculator shows you how.
Working out in which year you will ‘shuffle’ is of course problematic. The Office for National Statistics can give you a statistically significant date based on your birthday (go no further if you don’t want to know this date) but there are many other factors to consider. In our other calculators we have looked at how long a pension will last if you take a regular fixed monthly income from it, but in this calculator we show how much monthly income you can afford to take if you want that income to last until the year that you ‘shuffle’.
Of course this all comes with a hefty disclaimer, the main one being that the calculator is based on the tax rules pertaining to 2015. Governments have a habit of changing the basis and methods of calculating taxation remarkably frequently and your pension may need to last for around 30 years. If you think that in 1975 (just 30 years ago) the top rate of investment income tax was 98%, you can see how things can change over time.
Nevertheless, with those caveats in mind, here you go. Just enter your date of birth, the size of your pension pot, your existing annual taxable income, the investment growth rate you would like to model and the projected fees and charges. The Results section will tell you the age (rounded to the nearest full year) at which the ONS expects you to ‘shuffle’, and how much net monthly income you can afford to take from your pot if you want it to last to the ‘shuffle’ age.