How to use it
- Enter your age, when you’d like to retire, what you’ll spend each year, and the age that spending changes.
- Fill in each pot. Leave Contributions stop at blank to keep paying in until you retire, and set the age the DC pension can first be drawn.
- Put the pots in the order you’d draw them, using the arrows.
- Tick and fill in any defined benefit (final salary) pension and the State Pension.
- Press Calculate to see whether the money lasts to 100, any gaps before a pension opens, and which pot pays each year.
About
FIRE, “financial independence, retire early”, is about building enough investments to live on before the usual retirement age. This projects three pots year by year: Cash, a Stocks and Shares ISA and a DC pension: your SIPP and any workplace defined contribution pensions added together. Each pot grows at its own rate, with its own monthly contributions that stop at an age you choose.
Once you retire, whatever your pensions don’t cover is drawn from the pots in your chosen order. The DC pension can’t be touched before its from age: 57 for most people from 2028. If Cash and the ISA run dry first, there’s a gap: years where spending isn’t met, until the pension opens. Every pot keeps growing until it’s empty, including the pension before you can touch it.
Many people spend less in later life, so spending can step down at an age you choose. A defined benefit pension (from a final salary scheme, for example) and the State Pension reduce what you need to take from your pots once they start. Enter spending and pensions in today’s money; they rise with inflation. Tick today’s money to see every result adjusted for inflation.
All figures are gross. Tax is ignored, including Income Tax on pension withdrawals and the 25% tax-free pension lump sum. This is a model with steady returns, not financial advice.
Questions
Does this include tax?
No. Every figure is gross, before Income Tax. In practice most pension withdrawals are taxed as income after the first 25%, while ISA and cash withdrawals are tax-free, so you’d need to take more from a pension to spend the same amount.
Why draw from Cash and the ISA first?
The DC pension is locked until its from age, so Cash and the ISA usually bridge the years before then. Change the order to see what difference it makes.
Why is there one DC pension, not a SIPP and a workplace pension?
Defined contribution pensions all follow the same rules and open at the same age, so they’re modelled as one pot. Add their values and monthly contributions together.
Should I use real or nominal growth?
Enter each pot’s expected return as growth, and inflation separately. Ticking today’s money then shows everything after inflation.
What State Pension should I enter?
Check your forecast at gov.uk/check-state-pension, and use your State Pension age, which is 67 or 68 for most people under 60.