Pension worth in 18 years

babyseatibiza

Hi all, I am trying to work out how much a pension pot would be worth in 18 years. Is there an app I can use?

My pension is worth 270k today but I won't be retiring for 18 years.

Thanks

Jim_Hodge

https://www.boards.ie/discussion/2058312896/pension-worth-in-18-years

Almost impossible to tell. Will you and your employer still be adding to it for 18 years? How will it's investment fair over 18 years? What are the terms of the pension fund? If you were now retiring with a fund of €270k you'd probably get about €13000 a year, although you'll likely take some as a lump sum. But 18 years is a long way off. Investments should grow, salary and contributions will increase. Will you have the state pension as well?

Too early to tell.

pron

A couple of seconds on Google finds https://www.irishlife.ie/pensions/pension-products/quote (Other vendors are available)

If you stop adding to your pension today, and it's in a normal style fund, it'll begin to move towards cash (safer, but lower returns) in the next few years, to ensure you have "something" ..

The returns on cash / bonds are roughly in line with inflation - reckon 4% annually. The returns on investments tend to average about 10% annual over the long term - so let's say the 270k increases by 10% annually for the next 10 years and tapers towards pure cash / bonds by year 18

That's a very crude calculation - play with the numbers a bit - the formulas should be fairly obvious :)

The other thing to watch out for is that €40k now will be somewhere between €62k and €82k at 2.5% -> 4% inflation annually - which means the €1m above will last somewhere between 12 and 16 years paying out the then equivalent of €40k today (with zero lump-sum taken)

10% might be generous if predictions of a recession come true, or if inflation stays high, the 62-82k number could rise massively! .. so these are back-of-a-napkin numbers at best

Obviously consult a financial advisor for real calculations and advice

babyseatibiza

Thank you, that's exactly what I was looking for. I will have some fun playing with the numbers

daheff

Shorthand formula is

270k*(1+rate of return)^years

I do this every month dreaming of when I can retire comfortably 🤪