An annuity calculator is an easy and efficient way to see how much income could come from your pension savings, whether that means seeking single life or joint life annuities. It is particularly useful if you want to quickly assess how much your current pot is worth and estimate its potential income without needing a financial adviser’s personalised calculation.
Most people opt to purchase an annuity with part or all of their pension fund. Doing this provides an assured monthly income stream from both private and occupational pension pots; alternatively you could take some as a lump sum before investing the rest in order to try to create even greater retirement income streams.
There are various providers who provide annuities, each offering different rates. Therefore, it’s wise to shop around and compare offerings from multiple pension providers before accepting whatever their initial offering might be – this could save up to 20% off of your pension income!
One effective tool to do so is the annuity calculator, which compares quotes from UK providers on your behalf. It calculates how much a healthy 65-year-old could expect to receive as an annuity income with a 3% annual increase (though this amount may differ based on factors like postcode, health and lifestyle).
Hargreaves Lansdown provides a straightforward annuity calculator to give an estimation of what your retirement savings are currently worth and how much an annuity would cost you. Simply enter your date of birth, current pension pot size and desired monthly income target into its simple interface – then it shows how much this might be! However, its results page cannot be adjusted as changes need to be rerun for changes to take effect; so any modifications must be recalculated instead.
Money Helper offers another free annuity calculator, enabling users to compare rates from several UK providers. This calculator’s primary purpose is providing an idea of the cost associated with purchasing an annuity while also showing its impact from inflation and charges. Though straightforward in its operation, this tool requires basic knowledge about pension investments for optimal use.
At the 2014 Budget, Chancellor Philip Hammond introduced radical new pension rules allowing you to take your entire pot in one lump sum and pay less tax. This has sparked renewed interest in annuities as they can provide guaranteed income in retirement.