Pension Gap Calculator

What the pension gap calculator does

This tool answers one of the most common retirement questions: am I saving enough? It compares two numbers — the pot your current savings are on track to grow into by your target retirement age, and the pot you would actually need to fund the income you want — and reports the difference as your pension gap. Where there is a shortfall, it also estimates the extra monthly contribution needed to close it. It is built for anyone with a defined contribution pension, SIPP or workplace scheme who wants a quick, realistic sense of whether their plan is on track, and it sits alongside our other planning tools and the wider UK Pensions hub.

How it works — the method behind the numbers

The calculator runs four connected steps. First, it projects your pot. Starting from your current balance, it compounds the fund month by month at your chosen annual return and adds your personal and employer contributions each month until your target retirement age. The three return presets — conservative (4%), balanced (6%) and growth (8%) — let you stress-test the outcome against different market assumptions.

Second, it works out the pot you need. The headline target is a present-value, or discounted-annuity, figure: it finds the lump sum that, invested at your assumed return, would pay your desired annual income for the whole of your expected retirement length. Alongside it, the tool shows a 4% rule equivalent — your desired income multiplied by 25 — as a familiar sense-check. You can read more about that benchmark in our guide to the 4% rule for international retirees.

Third, it accounts for the State Pension. If you tick the box, the model assumes the full new State Pension of £12,548 a year from age 67, inflates it to the point it begins, and subtracts the value of that income stream from the pot you would otherwise need. If you plan to retire before 67, it correctly makes your private pot carry the full income until State Pension age, then lets the State Pension take over. Finally, where your projected pot falls short of the target, it solves for the additional monthly contribution that would close the gap over your remaining years, using a standard future-value-of-contributions calculation.

The inputs you provide

You set your current age and target retirement age, your current pension pot, your own and your employer's monthly contributions, an expected return, an inflation assumption, your desired annual income in today's money, how long you expect retirement to last, and whether to include the State Pension. Every field updates the result instantly, so the tool doubles as a quick “what if” model: nudge your retirement age, raise your contribution, or switch return preset and watch the gap move.

The inflation assumption is used to grow the State Pension to the age it starts, so it feeds the offset rather than the growth of your own pot. Because you enter your desired income in today's money, it is worth being honest about the lifestyle you are picturing — housing costs, travel, and whether a mortgage will be cleared by then all shift the number materially. If in doubt, model a higher and a lower income figure and treat the answer as a range rather than a single point.

Key assumptions and limitations

Simplicity is deliberate, but it has trade-offs you should understand. The projection applies a single, constant rate of return — real markets are volatile, and the order in which good and bad years arrive (sequencing risk) matters a great deal once you start drawing an income. The model does not add pension tax relief, which in practice boosts the value of your contributions, nor does it deduct product and platform charges, which reduce net growth. It assumes your target income stays level in retirement rather than rising each year with inflation, and it holds your contributions constant. The £12,548 State Pension figure is illustrative and assumes a full entitlement; your actual amount depends on your National Insurance record, which you can verify by following our guide to checking your State Pension forecast.

How to read your result

The headline is your projected pot, colour-coded against the target: green when you are on track, amber when you are within about 20% of the target, and red when you are further short. Below it you will see the target pot, the 4% rule equivalent, your years to retirement, the total you will have contributed, and how much the State Pension shaves off the requirement. Take the defaults as a worked example — a 40-year-old with a £50,000 pot paying in £600 a month (personal plus employer), targeting £35,000 a year from age 65. The tool compounds those contributions to retirement, compares the result with the discounted pot needed to pay £35,000 a year for 25 years less the State Pension, and — if there is a gap — shows the extra monthly amount that would close it. Change any assumption and the whole picture re-prices.

Why it matters and what to do next

Spotting a gap a decade or two early is what makes it fixable: small, sustained increases in contributions have years of compounding to work with, whereas a shortfall discovered at 60 leaves far fewer options. If the calculator flags a gap, the usual levers are raising your own or salary-sacrifice contributions, capturing any unused employer match, using unused annual allowance through carry-forward, or reviewing your target retirement age. For a deeper walk-through of the approach, see our guide to retirement income gap analysis, then use the Retirement Calculator and State Pension Calculator to pressure-test the drawdown and entitlement sides of the plan in more detail.