Investment drawdown calculator simulator#

Some insights into the results this tool unearths: Whereas other drawdown calculators tend to use a standard annual inflation rate, ours will test the value of your invested pension pot against real market conditions. It assumes that your pension pot remains invested throughout your retirement and that dividends are reinvested. If you’re trying to work out how much you can afford to take from your pension in retirement, our drawdown calculator is a handy tool to get you started. However, this calculator does adjust the withdraw amount by the CPI each year of the simulation. The numbers don’t translate to actual purchasing power in the starting year of the simulation. The numbers this calculator outputs are not inflation adjusted, they are nominal values. Essentially it replays what happened in each of the years in the dataset given the inputs and then summarizes the results. Instead, this calculator uses historical UK data and backtests against it.

Investment drawdown calculator simulator#

This calculator is NOT a Monte-Carlo simulator in that it does not generate any fake or random data.

Updates the portfolio balance by adding the change in value and subtracting the withdrawal amount.

Adjusts the annual withdraw amount for inflation based on the CPI (consumer price index) for that year.

Calculates the change in value in the portfolio.

In this sense, the effect of the great depression is factored in for early and late starting years.Įach individual simulation computes returns by stepping through the years (eg 1928, 1929, … 1958) and performs the following each year: In simulations that go beyond the present year, it will wrap back to 1928 and count up from there.

How your investment choices could affect the value of your pension pot over timeįor a 30 year retirement period, this calculator will run a simulation from 1928 to 1958, then it will run a simulation from 1929 to 1959, then from 1930 to 1960, and so on.

How more or less income might impact how long your pension pot will last.

How a larger pension pot might last or allow you to take a higher retirement income.

How a longer or shorter retirement might affect your income.

You can see how different retirement scenarios would affect your pension: What it offers is a chance for you to stress test your retirement plans against numerous market conditions. Remember that this calculator is based on historical UK market data and that past performance is not an indicator of future returns. Our drawdown calculator will help you understand the likelihood that your pension pot will last you through retirement. If you have a preference for how you like to split your investments between stocks, bonds and cash, you can enter custom figures here.

All cash – using Bank of England historical interest rates.

All bonds – based on Sterling UK Government bonds.

All stocks – based on UK Equity Index and FTSE all-shares total return.

Cautious – lower risk investment funds – 35% stocks & 65% bonds.

Balanced – medium risk investment funds – 55% stocks & 45% bonds.

Growth – higher risk investment funds – 85% stocks & 15% bonds.

We’ve given you the option of stress testing 6 different types of ‘ready-made’ investment strategies This is a great way to see how you really feel about risk and what kind or risk vs returns you might be comfortable with. This calculator gives you the chance to see how different investment decisions would have played out in numerous different market conditions. High-risk investments might offer the chance of higher returns but they also come with the danger of higher volatility and potentially higher losses.

How you choose to invest your pension pot will affect how your investments perform.