UK Pension Drawdown Calculator — Will Your Pension Last?
Years Pension Lasts
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Tax-Free Lump Sum
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Total Withdrawn
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How This Calculator Works
Pension drawdown (also called income drawdown) allows you to withdraw money directly from your UK pension pot while leaving the rest invested. Unlike an annuity, drawdown offers flexibility but comes with the risk of running out of money. This calculator models how long your pot may last given your withdrawal rate, expected investment returns, and inflation.
Under current UK rules, you can take 25% of your pension tax-free as a lump sum. The remaining 75% is taxed as income when withdrawn. The calculator separates this tax-free portion and then models annual withdrawals adjusted for inflation against investment growth.
Key risks include sequence-of-returns risk (poor early returns can devastate your pot), living longer than expected, and inflation eroding purchasing power. Most financial advisers recommend a withdrawal rate of 3-4% for sustainability over a 30-year retirement.
Frequently Asked Questions
What is the 25% tax-free lump sum?
Under UK pension rules, you can typically take 25% of your pension pot as a tax-free lump sum. The remaining 75% is taxed as income when withdrawn through drawdown.
What is a sustainable drawdown rate?
Most financial advisers suggest 3-4% annual withdrawal rate for a 30-year retirement. Higher rates increase the risk of running out of money, especially during market downturns.
Can I change my drawdown amount?
Yes, unlike an annuity, drawdown is flexible. You can increase, decrease, or stop withdrawals at any time. This flexibility is one of the key advantages of drawdown over annuity purchase.