Retirement Withdrawal Calculator
Calculate how long your retirement savings last at different withdrawal rates.
What this calculator does
This calculator works out how long a pension or investment pot lasts when you withdraw a fixed percentage of the starting value each year and increase it with inflation. Enter the pot, the withdrawal rate, your expected return, an inflation rate, and your age, and it reports the age the money runs out along with the initial monthly income.
The year-by-year table shows the mechanic that matters. In the early years growth exceeds withdrawals and the pot often grows. Then withdrawals, rising with inflation, overtake returns and the balance starts falling. Where that crossover happens is what really decides how long the pot survives.
When to use it
The obvious moment is at the point of moving into drawdown, when you have a real pot and need a sustainable income figure. It is also the tool for testing a rate you have already settled on, because taking an extra half a percent to fund something specific looks harmless until you see how many years it removes.
It is just as useful before you retire, for deciding between stopping at 57 and stopping at 62. Retiring earlier means a smaller pot funding a longer drawdown and, if you go before pension access age, a bridging period your ISAs must cover alone.
Understanding the inputs
Starting balance should be the pot you genuinely intend to spend, so combine any SIPPs and workplace pensions plus ISAs earmarked for income, and exclude property or anything you plan to leave behind. Withdrawal rate applies to that starting value, so 4 percent of £600,000 is £24,000 in year one, then that figure indexed to inflation.
Expected return should reflect a drawdown-stage portfolio, so nearer 5 percent than 7, and after platform and fund charges. Use around 2.5 percent for inflation, matching the Bank of England target, but recognise that the gap between return and inflation is what drives the outcome, not either figure alone.
How is this calculated?
Each year: Balance = Previous × (1 + Return) − Withdrawal × (1 + Inflation)^year.
A worked example
Take a £600,000 pot at age 60, with a 5 percent return and 2.5 percent inflation. At a 4 percent withdrawal rate the first year gives £24,000, or £2,000 a month before tax, and the pot lasts around 41 years, running dry near age 101. That is a wide margin even for a retirement starting at 60.
Push the rate to 5 percent, or £30,000 a year, and the pot lasts roughly 29 years, ending around age 89. Twelve years of longevity is the price of £6,000 a year of extra income. Add a full State Pension from 67 and the portfolio's share of your spending drops sharply, which is often the cheaper way to close the gap.
Limitations and assumptions
These figures are projections under fixed assumptions rather than predictions. The model applies the same return every year, which no real portfolio does, and that simplification conceals the biggest danger in drawdown. Sequence-of-returns risk means a poor opening five years can empty a pot a decade earlier than the same average return arriving in a kinder order.
It also ignores income tax on withdrawals, the 25 percent tax-free element, the State Pension, the money purchase annual allowance, care costs, and any flexibility in your spending. Real retirees cut back after bad years, and that flexibility is worth years of longevity. Treat the result as indicative and revisit it annually.
Common Questions
- How long will a £500,000 pension pot last?
- At a 4 percent withdrawal rate that is £20,000 a year rising with inflation, which a balanced pot typically sustains for roughly 35 years. At 5 percent, or £25,000, it falls closer to 25. With a full State Pension of around £11,970 on top, the portfolio has less work to do than the headline suggests.
- Does the 4 percent rule apply in the UK?
- Only loosely. It came from US market history over a 30-year retirement, and UK studies using domestic data have often landed nearer 3.5 percent. Add platform and fund charges of half a percent or more and the sustainable figure falls again. Treat 4 percent as an assumption to test rather than a rule.
- How is pension drawdown taxed?
- You can normally take 25 percent of a defined contribution pot free of tax, capped by the lump sum allowance of £268,275. Everything else is taxed as income at your marginal rate when drawn. A £30,000 gross withdrawal is therefore not £30,000 spendable, and large one-off withdrawals can push you into the higher rate band.
- What is sequence-of-returns risk?
- It is the danger of poor markets in the first years of drawdown. Selling units to fund withdrawals while prices are low permanently reduces the pot that later growth compounds on. Two people with the same average return over retirement can run out years apart depending only on when the bad years arrive.
- Should I take the 25 percent tax-free cash straight away?
- Not automatically. Taking it in stages through uncrystallised funds pension lump sums, where each withdrawal is 25 percent tax-free and 75 percent taxable, keeps more invested and can spread the tax more evenly. Taking the full amount at once makes sense mainly when you have a specific use for it.
- Does the State Pension change my withdrawal rate?
- Substantially. The full new State Pension is around £230 a week, roughly £11,970 a year, and it is inflation-linked under the triple lock. Subtracting it from your target income before setting a withdrawal rate often drops the rate the portfolio needs to sustain by a full percentage point or more.
- What is the money purchase annual allowance?
- Once you flexibly access a defined contribution pension beyond tax-free cash, your annual allowance for future pension contributions drops from £60,000 to £10,000. If you plan to keep working part-time and paying in, taking flexible income early can be an expensive move that this calculator does not account for.
- Drawdown or an annuity?
- Drawdown keeps the money invested and inheritable but leaves you carrying investment and longevity risk. An annuity transfers both to an insurer for a guaranteed income. Many retirees do both, annuitising enough to cover essential spending and drawing down the rest, which caps the damage a bad market sequence can do.
- What return should I assume in drawdown?
- Lower than during accumulation, since most pots become more cautious at retirement. Five percent nominal for a mixed portfolio is a reasonable planning figure, and you should deduct platform and fund charges from it. Carrying an accumulation-stage return into drawdown is one of the commonest ways these projections flatter themselves.