Are you on track for the retirement you want?
This compares the pot you are heading for with the pot your target income would need, after inflation has been applied to that target. The gap is usually larger than people expect.
What this calculator does
- Projects your pot to your target retirement age.
- Inflates your target income to what it will cost by the time you retire.
- Converts that future income into the pot required at your chosen withdrawal rate.
- Reports the shortfall or surplus, and the funding ratio between the two.
How the calculation works
The calculation runs from both ends and compares them. Forwards, your existing pot and monthly contributions are compounded to your retirement age. Backwards, your target income is first inflated — because an income that supports you today will cost considerably more in twenty-seven years — and then divided by your withdrawal rate to give the pot needed to sustain it. Dividing by the withdrawal rate is what converts an income into a capital requirement: at 4%, every £1 of annual income needs £25 of pot behind it, so the multiplier is large and small changes in the target income move the required pot enormously. The funding ratio is simply the projected pot as a proportion of the required one, and it is the most useful single number here because it turns two large and slightly unreal figures into one proportion you can act on.
The rule
Future target income = target today × (1 + inflation)^years. Required pot = future target income ÷ withdrawal rate. Funding ratio = projected pot ÷ required pot.
Step by step
- Compound the current pot and monthly contributions forward to the retirement age.
- Inflate the target income from today's money to the retirement date.
- Divide the inflated income by the withdrawal rate to give the pot required.
- Compare the two to give the gap and the funding ratio.
Worked example
A 40-year-old with £80,000 saved, paying in £500 a month, aiming to retire at 67 on the equivalent of £30,000 a year today, assuming 5% growth, 2.5% inflation and a 4% withdrawal rate.
What was entered
| Current age | 40 |
|---|---|
| Target retirement age | 67 |
| Current pension pot | £80,000 |
| Total monthly contribution | £500 |
| Expected annual growth rate | 5% |
| Expected annual inflation rate | 2.5% |
| Target annual retirement income | £30,000 |
| Annual withdrawal rate | 4% |
The arithmetic
- There are twenty-seven years to retirement.
- £80,000 plus £500 a month compounded at 5% projects to about £634,142.
- £30,000 of income today, inflated at 2.5% for twenty-seven years, costs about £58,434 a year by 67.
- At a 4% withdrawal rate that income needs a pot of about £1,460,850 — twenty-five times the income.
- The projected pot covers about 43% of that, leaving a gap of roughly £826,708.
- The gap is driven mostly by inflation on the target rather than by weak growth on the pot.
What the calculator returns
| Projected pot at retirement | £634,142.05 |
|---|---|
| Target income in retirement-date money | £58,434.00 |
| Pot required | £1,460,850.01 |
| Shortfall | -£826,707.96 |
Key assumptions
- Growth and inflation are steady at the rates entered.
- Contributions continue unchanged, with no increases as pay rises.
- The withdrawal rate you choose is sustainable for as long as you need the income.
- The target income is entered in today's money and inflated by the calculator.
Limitations
- The State Pension is not included, and for most people it covers a meaningful part of a £30,000 target — so this shortfall overstates the true gap.
- Other pensions, ISAs, property and any inheritance are not counted.
- A withdrawal rate is a rule of thumb, not a guarantee. Sequence of returns risk means the same average return can succeed or fail depending on the order the years arrive in.
- Contributions held flat in nominal terms understate a career where they rise with earnings.
- This is a projection, not advice. Free impartial guidance is available, and Pension Wise offers a free appointment from age 50.
Common questions
Why is the required pot so enormous?
Does this include the State Pension?
Is a 4% withdrawal rate safe?
The gap looks hopeless — what actually moves it?
Related calculators
- Retirement Target Calculator — The same question with the State Pension included, which closes much of this gap.
- Retirement Income Calculator — See what income a given pot would actually produce after tax.
- Safe Withdrawal Rate Calculator — Test whether the withdrawal rate you assumed is realistic over a long retirement.
Official sources
Every figure in this guide was checked against the sources below. Where a source could not confirm a figure, it is marked as requiring verification rather than presented as settled.
- Pension Wise: free pension guidance — MoneyHelperFree impartial guidance on pension options, available from age 50
- Plan your retirement income — GOV.UKSources of retirement income and how to check what you will have
- The new State Pension: what you'll get — GOV.UKFull new State Pension £241.30 a week; 35 qualifying years for the full rate where the record began after April 2016