Pension Calculator: The Purpose of Calculating Your Pension and Retirement Income Potential
A pension is a form of savings account which provides people with a regular income, usually after retirement. The minimum age at which one can retire and take benefits from their pension is 55. Pension plans may be set up by an employer, an insurance company, the government or other institutions such as employer associations or trade unions.
There are three main types of Pension: A Personal Pension, A Company Scheme Pension and the State Pension. The most simple form of pension is a Stakeholder pension, which is a Personal Pension - You can apply for a Stakeholder Pension here. Arranging a pension provision is vital if you do not want to face poverty when you come to retire in your sixties.
The only way you can be certain of financial security when you retire is to start thinking about your pension when you are young! By saving money from an early age, even if it is just small amounts, you can eventually end up with a substantial amount to live on once you reach retirement. The best option, if it is available, is to join your company's occupational pension scheme because most employers will top up your contributions. However, the freedom of a personal pension is also available. Personal Pensions can be started by anyone at any age. It's increasingly important to monitor the performance of your pension. You should have a good idea on your path to retirement and the effect of your monthly contributions are making on the income you will receive when you retire.
Pension calculators are an essential tool for monitoring your pensions performance. A retirement calculator will give you an idea of how much money you will need to save to secure the kind of pension you would like to live on when you retire. In our experience, many people ask 'How much do I need to start saving for my pension to be beneficial at retirement?' Using a pension calculator will work out how much you will need to save each month to reach your desired retirement income.
Many pension calculators will also show your potential annuity income rates based on pre-defined figures that you can edit based on current annuity rates.
A pension calculator only gives a sample indication of the funding contributions for your pension and no reliance should be placed on it. A retirement calculator does not take into account any contributions an employer might make to your pension.
For a full and accurate assessment of your personal finances and any tax relief you may be entitled to on your pension contributions always consult with a professional and independent financial adviser, also known as an IFA. Once you have used a pension calculator, your next step is to talk to your employer, trade union, bank, insurance company, building society or financial advisor about starting your pension today.