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Home > Blog > Pensions > Pension Forecasting: Work Out Your Retirement Income
Whether you’re nearing retirement age or are looking ahead to plan your saving strategy, getting a pension forecast of how much your current pension might payout can help you identify and remediate any shortfalls. In this blog, Hilltop Financial Planning explains how and why you should use a pension forecast calculator to estimate your potential retirement income.
A pension forecast is an estimate of how much income you will receive from your pension pot at retirement. Of course, the income you receive will depend on several factors, including the value of your pension pot, your chosen retirement age, and if you’re interested in a fixed income, annuity rates. However, a pension forecast can give you a good idea of whether your pension pot is on track to provide you with the income you need in retirement.
Armed with the details of your retirement pension forecast, you can take appropriate action if necessary. Such as speaking with a financial or pension adviser to devise a strategy that helps you to secure a worry-free future.
When using a pension calculator, you will need to input information such as your current age, the value of your pension pot, and your chosen retirement age. Once you’ve provided this information, the pension calculator will estimate your retirement income. It’s worth remembering that any pension forecast is only an estimate. Your actual retirement income may be higher or lower than the amount shown. For this reason, it’s always a good idea to speak with a financial professional.
There are several ways to get a pension forecast in the UK. You can contact your pension provider to request a pension forecast or you can speak with a financial advisor to get a professional forecast as part of an assessment. There are also various online pension forecast calculators you can use. For instance, our pension fee calculator shows you how provider fees can impact your pension over the short, medium or long term. Simply enter your current pension value, age and preferred retirement age to see the difference lower fees can make.
If you’re approaching retirement, you can also get a state pension forecast from the government. You can check a state pension forecast using the government’s online state pension forecast tool to estimate how much state pension you could be entitled to receive. This is based on your National Insurance contributions, years accumulated, and any other state pension you’ve built up. You can also request a state pension forecast by post or phone.
There are several reasons why pensions forecasts can be beneficial, including the following:
Firstly, getting a pension forecast from your pension provider or a pension forecast calculator can help you to identify any shortfall in your pension savings. If you’re nearing retirement and find that your pension pot isn’t on track to give you the income you need for a comfortable retirement, you can change your saving strategy accordingly. A financial adviser can help you to formulate a plan to get your savings back on track.
Secondly, a pension forecast can help you to decide when you could financially retire. For example, suppose you’re aiming to retire at a certain age, but your pension forecast shows you won’t have enough income to cover your costs. In that case, you may need to consider working for longer or making different arrangements for your retirement or visa-versa, you could find out you can retire earlier and still enjoy your retirement. Again, a financial adviser can give you a helpful steer in this type of instance, providing a range of options to consider.
Thirdly, a pension forecast like that provided by Hilltop’s pension fee calculator can show you the cost of provider fees in real terms. With this information at your disposal, you can work with your financial adviser to mitigate the cost of management fees. For example, you may choose to make a pension consolidation to bring several pensions, including lost or frozen pensions, under the auspices of one overarching pension with a single, more favourable fee.
Getting a pension forecast is an excellent way to check your progress towards retirement and determine whether you need to change your saving strategy. A pension forecast calculator can give you an estimate of your retirement income and potential peace of mind about your future. If your pension forecast raises any red flags, such as a projected shortfall in retirement income, speak to a Hilltop financial adviser for bespoke pension advice.
If you’d like advice about your pension or would like to arrange a consultation, please contact us at 0161 413 7051. We’re open 9 am to 5 pm Monday to Thursday and 9 am to 4 pm on Fridays. Hilltop is authorised and regulated by the financial conduct authority and ranked in the Top 100 UK Financial Advisers by FT Adviser. Our advisers have more than 100 years of combined experience and knowledge of working with people like you and helping them to make the most of their finances.
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