Taking Your Pension — Annuities, Drawdown & Lump Sums Pension Drawdown Calculator UK — How Long Will Your Pension Last? Calculate pension drawdown sustainability. Work out how long your pension pot will last, sustainable withdrawal rates, and income tax on pension withdrawals.
By James Whitfield
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23 March 2026
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Last reviewed: 16 September 2026
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5 min read Pension drawdown lets you take flexible income from your pension. Here’s how to calculate sustainable withdrawals.
For the wider cluster covering pension tax relief, lump sums, drawdown tax planning and annuity choices, use the main Pension Tax hub .
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 £12,548 Pension drawdown £30,000 Tax-free portion -£7,500 Total taxable £35,048
Tax Calculation Amount Personal Allowance £12,570 @ 0% = £0 Basic rate £22,478 @ 20% = £4,496 Total tax £4,496
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 (£12,548) ~£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
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