Pension Contribution Gap Calculator
Three steps. Divide the target yearly income by the withdrawal rate for the pot needed: 36,000,000 at 4% is 900,000,000. Then grow what you already have — 80,000,000 at 5% for 25 years becomes 270,908,395 — leaving a shortfall of 629,091,605. Finally, monthly contributions compounding at the same 5% for 300 months carry an accumulation factor of 595.51, so 629,091,605 ÷ 595.51 is 1,056,392 a month.
Your numbers
Monthly needed
1,056,392
Pot needed
900,000,000
What today’s savings grow to
270,908,395
Shortfall
629,091,605
Formula
Pot needed = Retirement income wanted ÷ (Withdrawal rate ÷ 100), Monthly needed = Shortfall × i ÷ ((1 + i) ^ n − 1), i = Annual rate ÷ 1200, n = Years × 12
The return is held constant year after year. Real markets swing, and a fall in the last few years before retirement splits outcomes widely at the same average return. Tax, fees, employer contributions and any state pension already due are not in here. The target income is not inflated either, so enter it in today's money and put a real, above-inflation return in the rate field — a nominal return shrinks the target in purchasing-power terms over 25 years. The 4% withdrawal rate is itself the result of one study on one market over one horizon.
What to enter
| Input | Default | Accepted range |
|---|---|---|
| Retirement income wantedWhat you want to spend each year in retirement; enter it in today's money. | 36,000,000 | 0 and up |
| Withdrawal rate (%)The share you draw from the portfolio each year; lower means a bigger portfolio. | 4 | 0.1 ~ 20 |
| Saved so farWhat you have set aside so far. | 80,000,000 | 0 and up |
| Years (yr)How many years the money stays put; compounding bites harder as this grows. | 25 | 0 ~ 60 |
| Annual rate (%)Interest quoted per year; the monthly rate is this over 12. | 5 | 0 ~ 20 |
Step by step
Quick reference table
Results when only Retirement income wanted changes and everything else stays put.
| Retirement income wanted | Monthly needed | Pot needed | What today’s savings grow to |
|---|---|---|---|
| 18,000,000 | 300,737 | 450,000,000 | 270,908,395 |
| 27,000,000 | 678,564 | 675,000,000 | 270,908,395 |
| 36,000,000 | 1,056,392 | 900,000,000 | 270,908,395 |
| 54,000,000 | 1,812,047 | 1,350,000,000 | 270,908,395 |
| 72,000,000 | 2,567,702 | 1,800,000,000 | 270,908,395 |
What each result means
| Result | At default values |
|---|---|
| Monthly neededWhat to pay in each month to land on the goal. | 1,056,392 |
| Pot neededThe pot that carries that income at that withdrawal rate. | 900,000,000 |
| What today’s savings grow toWhat today's savings grow to at that return over that time. | 270,908,395 |
| ShortfallThe pot needed less what today's savings become — the part contributions must fill. | 629,091,605 |
Common mistakes
The return is held constant year after year. Real markets swing, and a fall in the last few years before retirement splits outcomes widely at the same average return. Tax, fees, employer contributions and any state pension already due are not in here. The target income is not inflated either, so enter it in today's money and put a real, above-inflation return in the rate field — a nominal return shrinks the target in purchasing-power terms over 25 years. The 4% withdrawal rate is itself the result of one study on one market over one horizon.
Glossary
- Retirement income wanted
- What you want to spend each year in retirement; enter it in today's money.
- Withdrawal rate
- The share you draw from the portfolio each year; lower means a bigger portfolio.
- Saved so far
- What you have set aside so far.
- Years
- How many years the money stays put; compounding bites harder as this grows.
- Annual rate
- Interest quoted per year; the monthly rate is this over 12.
- Monthly needed
- What to pay in each month to land on the goal.
- Pot needed
- The pot that carries that income at that withdrawal rate.
- What today’s savings grow to
- What today's savings grow to at that return over that time.
- Shortfall
- The pot needed less what today's savings become — the part contributions must fill.
Frequently asked questions
Q. How is Pension Contribution Gap Calculator calculated?
Pot needed = Retirement income wanted ÷ (Withdrawal rate ÷ 100), Monthly needed = Shortfall × i ÷ ((1 + i) ^ n − 1), i = Annual rate ÷ 1200, n = Years × 12 — Three steps. Divide the target yearly income by the withdrawal rate for the pot needed: 36,000,000 at 4% is 900,000,000. Then grow what you already have — 80,000,000 at 5% for 25 years becomes 270,908,395 — leaving a shortfall of 629,091,605. Finally, monthly contributions compounding at the same 5% for 300 months carry an accumulation factor of 595.51, so 629,091,605 ÷ 595.51 is 1,056,392 a month.
Q. Can you walk through an example?
With Retirement income wanted 36,000,000, Withdrawal rate 4%, Saved so far 80,000,000, Years 25yr, Annual rate 5%, the answer is Monthly needed 1,056,392.
Q. What do I need to enter?
Enter Retirement income wanted, Withdrawal rate, Saved so far, Years, Annual rate. The result recalculates as you type, and an empty box counts as zero.
Q. How much does the answer move if I change a number?
Changing only Retirement income wanted moves the answer to Retirement income wanted 18,000,000 → Monthly needed 300,737 and Retirement income wanted 72,000,000 → Monthly needed 2,567,702. The table below lays out five steps.
Q. How are the numbers rounded?
Money is shown to the nearest whole unit, percentages to one decimal place and everything else to two. What you see is rounded; the calculation itself carries the unrounded value forward.
Q. Anything to watch out for?
The return is held constant year after year. Real markets swing, and a fall in the last few years before retirement splits outcomes widely at the same average return. Tax, fees, employer contributions and any state pension already due are not in here. The target income is not inflated either, so enter it in today's money and put a real, above-inflation return in the rate field — a nominal return shrinks the target in purchasing-power terms over 25 years. The 4% withdrawal rate is itself the result of one study on one market over one horizon.
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