Retirement Calculator
Living off the income from a capital sum can be risky for groups of people such as pensioners or Trust beneficiaries. They can be exposed to changes in interest rates and/or changes in the rate of inflation (a measure of the cost of living). For example someone living off a fixed income, that experiences high rates of inflation, will be able to buy less and less goods in the shops as time goes by. It is also important to plan carefully to avoid running short of money (sometimes known as longevity risk).
There are two calculators below which are for illustrative purposes only. The static calculator models a sum of money deposited in a bank account. The dynamic calculator models a portfolio invested in bonds and shares. The latter introduces the concept of capital gains. If those capital gains remain invested it also allows the income to grow at the same rate as the capital gains. Income from shares usually rises over time because the aggregate dividends paid by the companies, that make up the wider stock market, generally grow as the economy expands. In line with Financial Conduct Authority (FCA) guidance in this area the growth rate can vary between 2% and 8% per annum while the inflation rate can vary between 0.5% and 4.5% per annum. Please also note that the growth rate does not take into account management fees and commissions. So, if you want to take this into consideration you should make a suitable reduction to your chosen growth rate. Based on the inputs you choose, the calculators provide an estimate of how many years a sum of money in retirement would last until exhaustion. The maximum number of years is set to 60 years.
If you have found the calculators helpful and would like further information on our investment management services, for retirement portfolios above GBP 250,000, please contact us. We have written a short introduction to managing money in retirement and we also offer a free 30 minute consultation.
Disclaimer: The results displayed are for information purposes only and do not substitute obtaining advice from a qualified financial planner. The results displayed will be based on the information keyed in and no reliance should be made on the results provided.
The assumed investment growth rates are not minimum or maximum potential growth rates and actual returns may be higher or lower. Investment returns cannot be guaranteed. No allowance for taxation has been included; any taxes payable will depend on the investor’s individual circumstances
Static Calculator (bank type deposit)
Dynamic Calculator
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Below are past examples of the biannual investment outlooks that we provide for our clients. Hit the back button to return to the site.
Please contact us if you would like a copy of our most recent thoughts.
Case Studies
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Defensive strategy | A case study
John wanted to get a return on some money that he had inherited and looked first at bank and building society savings accounts but was disheartened by the low interest rates. He also considered investing in the stock markets but discarded this option as he already had a lot of money invested in equities. We
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Pre-retirement strategy | A case study
Mr and Mrs Smith were in their mid 50s and approaching retirement. Mr Smith was a self-employed consultant and Mrs Smith worked for the client service department of a large company. Throughout their careers they had accumulated a significant number of pension schemes that were sponsored, and partially funded, by previous employers. They found the
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Growth strategy | A case study
Mr Scott was a partner in a professional services firm and was approaching his fortieth birthday. He had accumulated some modest pension savings but he recognised that if he wanted to look forward to a comfortable retirement his current pension provision was not going to be sufficient. He had been meaning to do something about
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Income strategy | A case study
Dr Jones was a retired doctor looking for someone to help her invest her savings. She wanted to generate an income to supplement her NHS pension. She also wanted to be in a position to pass on the capital to her children. Dr Jones had already looked at a number of options. She found that
NB: These case studies are for informative purposes only. Whilst the description of the strategy, and the associated returns, are factual the case study is not based on an actual client portfolio. Past performance is no guarantee of future returns.