Retirement Health Check

Most people need less income when they retire than when they are working. Our estimates are based on guidelines developed by the Department for Work and Pensions:

• Less than £14,500: 80% of current income
• £14,500 – £26,999: 70% of current income
• £27,000 – £38,499: 67% of current income
• £38,500 - £61,499: 60% of current income
• Over £61,500: 50% of current income

We’ve assumed your pension savings will grow by 5% each year.

This is for illustrative purposes only. Investments can go down as well as up and you may not get back what you have invested.

We’ve assumed a charge of 0.75% each year is taken from your pension pot.

The Retirement Health Check is designed to show things in today’s money. When working out how much your pension pot and other savings and investments will be worth at your specified retirement age, we’ve assumed an inflation rate of 2% each year.

Rates of inflation can go up as well as down so the figures produced are for illustration purposes only.

We’ve assumed your salary will increase by 2% each year, so any ongoing pension contributions you make will increase by 2% each year in line with this.

We’ve assumed that your pension pot will be used at your specified retirement age to buy a guaranteed income for life (provided by a single-life annuity). The income is based on your assessment of your health. It’s payable monthly, with a 5-year guarantee, and is assumed to stay the same  throughout your life. This is based on current annuity rates so is an indication only.

You can usually take up to 25% of your total pension pot tax-free, generally up to a maximum limit of £268,275. Anything over this is taxable.

You may have a higher entitlement if you have protection from the Lifetime Allowance, but the calculator assumes that you don't and adjusts the tax-free cash percentage accordingly (using the lowest whole percentage).

Unless you’ve told us your exact State Pension amount, we’ve assumed you’ll receive the full State Pension. The State Pension age is currently 66, and will increase gradually to 67 between 2026 – 2028. When working out your estimated income, we’ve assumed your State Pension will start at age 67. If you were born before 6 March 1961, please bear in mind that your State Pension may start earlier.

We’ve assumed that defined benefit pension payments will increase each year in line with an inflation rate of 2%.

Rates of inflation can go up as well as down so the figures produced are for illustration purposes only.

Investment growth

If you expect to receive income from other savings and investments, we’ve assumed that these will grow by the following rates, depending on the type of savings and investments you have:

• 1% -If your savings are mostly in bank deposits/other low-risk saving schemes
• 3% - If you have mix of high and low risk savings and investments
• 5% - If most of your money is invested in stocks, shares and other high-risk assets

This is for illustrative purposes only. Investments can go down as well as up and you may not get back what you have invested.

Income

When you’re ready to take income from any other savings and investments you plan to use for retirement, we’ve assumed you’ll take the following amount based on the age you start:

• 3.0% pa: if your retirement age is between 55 – 59
• 3.5% pa: if your retirement age is between 60 - 64
• 4.0% pa: if your retirement age is between 65 – 69
• 4.5% pa: if your retirement is age 70 or older

You can usually take up to 25% of your total pension pot tax-free.

There is a limit on how much of a tax-free lump sum you can take called the Lump Sum Allowance. This limit is usually £268,275, for tax year 2024/25. You may have a higher entitlement if you have protection from the Lifetime Allowance, but the calculator assumes that you don't and adjusts the tax free cash percentage accordingly (using the lowest whole percentage).