Why everything in your plan is in today's money

Plan My Freedom never shows you a £3 million pension in 2060 pounds. Here's what "real terms" means and why it makes plans easier to read.

A pound in 2060 will buy a lot less than a pound today. If a projection showed your pension reaching £3 million in 2060, that might sound wonderful — until you realised it would buy what £1.2 million buys now.

So Plan My Freedom does everything in today's money. Every number you see — salary, spending, the value of your house, your pension at 67 — is expressed in pounds with today's purchasing power. You can compare any figure with what things cost now.

What that changes about the inputs

  • Returns are "real" returns — after inflation. Shares have historically returned around 5% a year above inflation; cash around 0–1%. Those are the defaults in Settings, and they're lower than the headline numbers you'll see quoted elsewhere because the inflation has been taken out.
  • Salary growth is real growth — pay rises beyond inflation, from promotions or moving jobs. If you expect to keep pace with inflation and no more, enter 0%.
  • Spending stays flat unless you say otherwise. £3,000 a month of living costs today is £3,000 a month in 2050, in today's money.
  • Tax thresholds are assumed to keep pace with inflation. In practice the UK has frozen them for several years, which quietly raises tax; if you want to be cautious, nudge your spending up or your salary growth down.

Why not just show future pounds?

You can — the inflation rate in Settings is there for it — but three things go wrong:

  1. Numbers become unreadable. Is £4.2 million at 85 a lot? Nobody can say without converting it back.
  2. Assumptions multiply. Every input needs an inflation assumption attached, and small differences compound over 40 years into wildly different-looking outcomes that mean the same thing.
  3. Comparisons break. "Retire at 60 versus 65" is a real-terms question.

The one thing to remember

When you enter a figure, ask: what would this cost today? That's the number the plan wants.

This is general education, not personal advice.