Project how long your pension pot will last with flexible drawdown withdrawals.
This calculator provides estimates for guidance only. It does not constitute financial or pension advice. Investment returns are not guaranteed and your pot may run out sooner or later than projected. Always consult a qualified financial adviser before making pension decisions.
Pension drawdown (also known as flexi-access drawdown) is the most popular way to access your defined contribution pension in the UK. Rather than buying an annuity that pays a fixed income for life, drawdown lets you keep your pension invested while withdrawing money as you need it. The key question is: how long will your pot last? This Pension Drawdown Calculator projects how many years your pension will sustain your desired income level, factoring in investment growth and inflation. It automatically calculates your 25% tax-free lump sum (capped at GBP 268,275 under current rules), then simulates year-by-year withdrawals from the remaining pot. Withdrawals increase each year with inflation to maintain your purchasing power, while the pot itself grows at your expected investment return. The balance between growth rate and withdrawal rate is critical. If you withdraw too much relative to growth, your pot will deplete quickly. The 4% rule -- a guideline suggesting you withdraw 4% of your pot in year one, then adjust for inflation -- has historically sustained a portfolio for 30 years. However, real-world returns vary, and this calculator helps you stress-test different scenarios. You can experiment with different growth rates, withdrawal amounts, and inflation assumptions to find a sustainable drawdown strategy that suits your retirement plans.
To project your pension drawdown: 1. Enter your total pension pot value. This is the current value of your defined contribution pension. If you have multiple pensions, you can either combine them or calculate each separately. 2. Enter your desired annual withdrawal. This is the gross annual income you want to take from your pension. Remember that withdrawals beyond the tax-free lump sum are taxed as income. A common starting point is 4% of your pot. 3. Set the expected annual growth rate. This depends on how your pension is invested. For a balanced fund, 4-5% is a common assumption. For cautious investments, use 2-3%. For equity-heavy portfolios, 5-7% may be appropriate but carries more risk. 4. Set the inflation rate. The default of 2% reflects the Bank of England's target. Higher inflation erodes your purchasing power faster, requiring larger withdrawals each year. Consider using 3% for more conservative planning. 5. View the results. The calculator shows how many years your pot will last, your tax-free lump sum, and what your withdrawal amount will be in the final year (adjusted for inflation). The line chart shows your pot value declining over time. 6. Experiment with scenarios. Try reducing your withdrawal by GBP 2,000 or increasing the growth rate by 1% to see the impact on pot longevity. Small changes can add or remove several years.
The calculator performs a year-by-year simulation after deducting the 25% tax-free lump sum: 1. Tax-free lump sum = 25% of pension pot, capped at GBP 268,275 2. Starting pot = Pension pot - Tax-free lump sum 3. Each year: Pot grows by growth rate, then withdrawal (inflation-adjusted) is deducted 4. Continue until pot runs out or 50 years pass For example, with a GBP 500,000 pot, GBP 25,000 annual withdrawal, 4% growth, and 2% inflation: The tax-free lump sum is GBP 125,000 (25% of 500,000). The remaining GBP 375,000 is invested. In year 1, the pot grows to GBP 390,000, then GBP 25,000 is withdrawn, leaving GBP 365,000. In year 2, the pot grows to GBP 379,600, and the inflation-adjusted withdrawal of GBP 25,500 is deducted, leaving GBP 354,100. As inflation increases the withdrawal amount each year while the pot shrinks, the pot eventually reaches zero. The net real return (growth minus inflation) determines sustainability. With 4% growth and 2% inflation, the real return is approximately 2%, which is insufficient to sustain a 6.67% withdrawal rate (GBP 25,000 from GBP 375,000) indefinitely. If the pot survives 50 years, the calculator indicates it effectively lasts indefinitely -- meaning your withdrawal rate is sustainable at those growth and inflation assumptions.
Under current UK pension rules (from April 2015), you can access your defined contribution pension from age 55 (rising to 57 from 2028). The 25% tax-free lump sum can be taken all at once or in stages through uncrystallised funds pension lump sums (UFPLS), where each withdrawal is 25% tax-free and 75% taxable. Withdrawals beyond the tax-free portion are added to your taxable income and taxed at your marginal rate. This means careful planning of withdrawal amounts can keep you in a lower tax band. For example, keeping total income below GBP 50,270 avoids 40% higher rate tax. Drawdown carries investment risk -- your pot can fall in value as well as grow. Sequence of returns risk is particularly important: poor investment returns in the early years of drawdown can permanently reduce your pot's longevity, even if long-term average returns are acceptable. Diversification and regular review of your investment strategy and withdrawal rate are essential. Consider keeping one to two years of withdrawals in cash within your pension to avoid selling investments during market downturns. Many pension providers offer a cash reserve facility specifically for this purpose. The Money and Pensions Service (MoneyHelper) offers free, impartial guidance on pension options.