Use this calculator to work out what your retirement savings will be worth by the time you retire and estimate how long those savings will be able to provide the pension you want in retirement.
The tool assumes you will invest your savings in an investment-linked living annuity and draw your retirement income from it. Buying a guaranteed or life annuity with all or part of your savings may change this outcome and will secure you an income for life.
The tool is designed to allow you to test different scenarios to improve your income in retirement by:
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You will reach retirement at age:
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By then your savings will be worth
?
Note: nominal value. This is calculated by the sum of the capital balance at the end of each month. Capital at the end of the month is calculated by: Capital start of each month+ investment growth on the capital amount + savings per month. The sum starts from today up until the last savings month i.e. the month before retirement or the month before birth month of the year of retirement.
Which in today's rands equates to
?
Note: real value. Sum of capital at the end of each month converted to real values (all existing savings with investment growth + new savings). The conversion is done by dividing the lump sum investment (including the investment growth) by [(1+ CPI)^(cumulative month of that value/12)]. The same is then done for the monthly contributions i.e. monthly contributions X [(1+ CPI)^(cumulative month of that value/12)] and the two sums are added together for the final value. The sum starts from today up until the last savings month i.e. the month before retirement or the month before birth month of the year of retirement.
Which you will reach by
Drawing a monthly income of
You will be aged
Warning: Your savings will run out within {numberofyears} years which is below the 30-year time horizon you should plan for in case you enjoy longevity in retirement. You may be willing to take this risk if you are in ill-health or have other savings.
Well done: Your savings last {numberofyears} years which is beyond the 30-year time horizon you should plan for in case you enjoy longevity in retirement.
This calculator is offered as a guide only to give you insight into how your savings will grow before retirement and how long your savings could support a particular income level after retirement.
The results are based on the performance of relevant unit trust fund categories representing the investment strategies over the past 10 or 20 years.
However, past performance is no guarantee of future performance and the returns you actually earn may be very different.
You are unlikely to earn the average annual return of all the funds in a unit trust category and you will not earn an average return each year throughout your retirement.
Instead, you may earn a high positive return one year and a negative return the next. This volatility or the order in which you earn returns can have a significant impact on your drawdown level and the length of time your savings will support your income.
When using a living annuity to provide an income in retirement you do not know how long you will live and should therefore plan for the longest life expectancy - around 30 years if you are retiring at age 65.
Smart About Money's retirement calculator should not be used in place of financial advice.
Determining appropriate saving levels before retirement and income drawdown levels after retirement is best done with comprehensive financial advice that takes into account your personal circumstances and provides a full explanation of all the risks you may face despite the projected outcome.
Here are the related items for the retirement calculator:
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Try this tool:
Living Annuity Drawdown Calculator | Smart About Money
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