Stable Numbers
Pension Pot Real Value Estimator
See how a defined contribution pot might grow with regular contributions and investment returns. Then adjust for inflation to understand the real spending power at retirement, with estimated income from drawdown or an annuity.
Pot growth over time
Tip: move your cursor across the chart to inspect each year.
Yearly breakdown
| Year | Contributed (cum) | Nominal value | Real value | Drawdown income (annual) | Annuity income (annual) |
|---|---|---|---|---|---|
How this estimator works
This tool models a defined contribution pension where your pot grows through contributions and investment returns. We compound returns monthly after fees, then adjust for inflation annually to show a real value in today’s money. At retirement we estimate an income using your chosen drawdown rate. If you select the 25 percent tax free lump sum, we reduce the pot before calculating income.
Defined contribution vs defined benefit
- Defined contribution (DC): you and your employer pay in. The final pot depends on contributions, returns and fees. Income is flexible, usually via drawdown or buying an annuity.
- Defined benefit (DB): pays a set income based on your salary and years of service. This tool is not designed for DB pensions, although the inflation concepts still apply.
Drawdown and annuities
- Drawdown: you keep the pot invested and withdraw a percentage each year. The tool shows a simple estimate based on your drawdown rate. The real outcome depends on future returns, fees and withdrawals.
- Annuity: you exchange your pot for a guaranteed income. The annuity rate here is an input for illustration only. Real market rates vary by age, options and interest rates.
Setting sensible assumptions
- Returns and fees: small fee differences compound over decades. Reducing costs can lift the real outcome significantly.
- Inflation: try a range. Comparing 2 percent and 4 percent makes the spending power gap clear.
- Contributions: consistency helps. If you contribute annually, choose the annual frequency so the maths matches your pattern.
- Lump sum: many people take 25 percent tax free. It reduces the pot used for income, which is why the drawdown figure changes when selected.
Reading the chart
- Nominal line: the pot before inflation. This is what most statements show.
- Real line: the pot in today’s money. This is the figure to use when planning living costs.
- Hover: move your cursor to see the pot values and total contributions for each year.
This is general information, not financial advice. Future returns, inflation and annuity rates are uncertain. Consider speaking with a regulated adviser if you need personal guidance.
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