Pension Drawdown Calculator UK — How Long Will Your Pension Last?

Pension drawdown lets you take flexible income from your pension. Here’s how to calculate sustainable withdrawals.

Drawdown Basics

How Drawdown Works

Step	What Happens
1	Move pension to drawdown
2	Take 25% tax-free (optional)
3	Invest remaining 75%
4	Withdraw income as needed
5	Remainder stays invested

Drawdown vs Annuity

Feature	Drawdown	Annuity
Flexibility	High	Low
Guaranteed income	No	Yes
Investment risk	You bear it	Insurer bears it
Can run out	Yes	No
Death benefit	Pot to heirs	Usually stops
Income level	You choose	Fixed

Sustainable Withdrawal Rates

Traditional Guidelines

Withdrawal Rate	Historical Sustainability
3%	Very conservative, likely to grow
3.5%	Conservative, high success
4%	Traditional “safe” rate
4.5%	Moderate risk
5%	Higher risk of running out
6%+	High risk, likely to deplete

What Affects Sustainability

Factor	Impact
Investment returns	Higher = longer
Inflation	Higher = shorter
Your lifespan	Longer = need lower rate
Starting age	Earlier = lower rate needed
Flexibility	Can you reduce if needed?

How Long Will Your Pension Last?

£100,000 Pension Pot

Withdrawal	0% Return	3% Return	5% Return
£4,000/year (4%)	25 years	34 years	50+ years
£5,000/year (5%)	20 years	25 years	35 years
£6,000/year (6%)	16.7 years	20 years	26 years

£250,000 Pension Pot

Withdrawal	0% Return	3% Return	5% Return
£10,000/year (4%)	25 years	34 years	50+ years
£12,500/year (5%)	20 years	25 years	35 years
£15,000/year (6%)	16.7 years	20 years	26 years

£500,000 Pension Pot

Withdrawal	0% Return	3% Return	5% Return
£20,000/year (4%)	25 years	34 years	50+ years
£25,000/year (5%)	20 years	25 years	35 years
£30,000/year (6%)	16.7 years	20 years	26 years

£750,000 Pension Pot

Withdrawal	0% Return	3% Return	5% Return
£30,000/year (4%)	25 years	34 years	50+ years
£37,500/year (5%)	20 years	25 years	35 years
£45,000/year (6%)	16.7 years	20 years	26 years

Tax on Pension Drawdown

The 25% Tax-Free Amount

Option	How It Works
Lump sum upfront	Take 25% tax-free immediately
Per withdrawal	25% of each withdrawal is tax-free
Combination	Take some upfront, rest phased
Maximum tax-free	Currently £268,275 (25% of £1,073,100)

Tax on the 75%

Total Income	Tax Rate on Pension
Up to £12,570	0%
£12,571 - £50,270	20%
£50,271 - £125,140	40%
Over £125,140	45%

Example: £30,000 Withdrawal

Element	Amount	Tax
Tax-free (25%)	£7,500	£0
Taxable (75%)	£22,500	See below

If Only Income	Tax Calculation
£22,500 taxable
Personal Allowance	£12,570 @ 0% = £0
Basic rate	£9,930 @ 20% = £1,986
Total tax	£1,986
Net from withdrawal	£28,014

Example: £30,000 + State Pension

Income Source	Amount
State Pension	£11,500
Pension drawdown	£30,000
Tax-free portion	-£7,500
Total taxable	£34,000

Tax Calculation	Amount
Personal Allowance	£12,570 @ 0% = £0
Basic rate	£21,430 @ 20% = £4,286
Total tax	£4,286

Tax-Efficient Withdrawal Strategy

Phased Withdrawals

Strategy	Benefit
Stay in basic rate	Avoid 40% tax
Use Personal Allowance	Tax-free income
Spread large withdrawals	Avoid higher brackets
Consider timing	ISA vs pension

Optimal Withdrawal Order

Order	Source	Reasoning
1	State Pension	Automatic, no choice
2	ISA income	Tax-free
3	Pension up to basic rate	20% or less
4	Other income	As needed

Annual Tax-Efficient Amount

Other Income	Optimal Pension Withdrawal
£0	~£29,000 taxable stays basic rate
State Pension (£11,500)	~£17,500 taxable stays basic
With 25% tax-free	Gross ~£23,000 for £17,250 taxable

Calculating Your Drawdown

Step-by-Step Calculator

Step	Your Numbers
1. Pension pot value	£_______
2. Tax-free lump sum (25%)	£_______
3. Remaining pot	£_______
4. Desired annual income	£_______
5. Withdrawal rate (÷ step 3)	_______%
6. Sustainable? (<4%)	Yes/No

Example Calculation

Step	Example
Pension pot	£400,000
Tax-free lump sum (25%)	£100,000
Remaining pot	£300,000
Desired income	£15,000/year
Withdrawal rate	5%
Sustainability	Medium risk

Strategies by Age

Age 55-65 (Early Retirement)

Consideration	Strategy
Long time horizon	Lower withdrawal rate
Before State Pension	Bridge with drawdown
Maximum tax-free use	Fill lower tax bands
Target rate	3-3.5% if possible

Age 65-75

Consideration	Strategy
State Pension starts	Reduce drawdown need
Still long horizon	3.5-4%
Review regularly	Adjust to pot performance

Age 75+

Consideration	Strategy
Shorter horizon	Can increase rate
Health consideration	Factor in life expectancy
Inheritance planning	Death benefits change
Possible rate	4-5% if flexible

Investment Strategy in Drawdown

Asset Allocation Approaches

Approach	Allocation	Risk
Conservative	30% equities, 70% bonds	Lower
Balanced	50% equities, 50% bonds	Medium
Growth	70% equities, 30% bonds	Higher

Sequence of Returns Risk

Risk	Meaning
Bad early years	Depletes pot faster
Good early years	Pot grows, more secure
Mitigation	Cash buffer for 1-2 years

Cash Buffer Strategy

Element	Purpose
Hold 1-2 years’ income in cash	Don’t sell in down markets
Replenish in good years	Sell when markets up
Reduces sequence risk	Smoother ride

Pension Summary Tables

Withdrawal Amount by Pot Size (4%)

Pot Size	Annual (4%)	Monthly
£100,000	£4,000	£333
£200,000	£8,000	£667
£300,000	£12,000	£1,000
£400,000	£16,000	£1,333
£500,000	£20,000	£1,667
£750,000	£30,000	£2,500
£1,000,000	£40,000	£3,333

Pot Needed for Target Income (4%)

Target Income	Pot Needed
£10,000/year	£250,000
£15,000/year	£375,000
£20,000/year	£500,000
£25,000/year	£625,000
£30,000/year	£750,000
£40,000/year	£1,000,000

Summary

Key Principle	Guidance
Sustainable rate	3-4% traditionally
Tax efficiency	Use 25% tax-free wisely
State Pension	Reduces drawdown need
Investment	Keep growing in retirement
Flexibility	Review and adjust
Professional advice	Recommended for large pots