Pension Drawdown Calculator
Calculate how long your pension pot will last with drawdown. See year-by-year projections with growth.
Source: GOV.UK
By Konstantin Iakovlev · Founder, Calks.uk
Last updated: · Verified against HMRC and GOV.UK 2026/27 rates
Your Pot Will Last
17 years 5 months
After £62,500.00 tax-free lump sum
| Year | Withdrawn | Growth | Balance |
|---|---|---|---|
| 1 | £15,000.00 | £7,360.96 | £179,860.96 |
| 2 | £15,000.00 | £7,049.73 | £171,910.70 |
| 3 | £15,000.00 | £6,725.83 | £163,636.52 |
| 4 | £15,000.00 | £6,388.73 | £155,025.25 |
| 5 | £15,000.00 | £6,037.89 | £146,063.14 |
| 6 | £15,000.00 | £5,672.76 | £136,735.90 |
| 7 | £15,000.00 | £5,292.75 | £127,028.65 |
| 8 | £15,000.00 | £4,897.26 | £116,925.92 |
| 9 | £15,000.00 | £4,485.66 | £106,411.58 |
| 10 | £15,000.00 | £4,057.29 | £95,468.87 |
| 11 | £15,000.00 | £3,611.47 | £84,080.34 |
| 12 | £15,000.00 | £3,147.48 | £72,227.83 |
| 13 | £15,000.00 | £2,664.59 | £59,892.42 |
| 14 | £15,000.00 | £2,162.03 | £47,054.45 |
| 15 | £15,000.00 | £1,638.99 | £33,693.44 |
| 16 | £15,000.00 | £1,094.64 | £19,788.09 |
| 17 | £15,000.00 | £528.12 | £5,316.21 |
Disclaimer
This calculator is provided for informational purposes only and should not be considered as financial or tax advice. All calculations are performed locally in your browser — no personal data is collected or sent to our servers. Rates and thresholds are sourced from HMRC and GOV.UK and are updated for the current tax year. Always verify results with HMRC or consult a qualified professional before making financial decisions.
How It Works
Flexi-access drawdown lets you take 25% of your pension pot as a tax-free Pension Commencement Lump Sum (PCLS), then draw taxable income from the remaining 75% while keeping the pot invested. The tax-free portion is calculated at crystallisation: for a £200,000 pot, £50,000 is tax-free and £150,000 enters the drawdown fund. Withdrawals from the drawdown fund are taxed as earned income at your marginal rate.
Pot longevity projections model the balance between investment growth and withdrawal rate. The sustainable withdrawal rate depends on asset allocation, charges, and assumed growth. At a 4% withdrawal rate with 5% nominal growth and 0.5% charges, a pot typically lasts 30+ years. At 6% withdrawal, the same pot may deplete within 20 years. Sequence-of-returns risk means poor early performance disproportionately shortens pot life.
Income tax on drawdown withdrawals stacks on top of any other income including State Pension. The first £12,570 of total income is tax-free (personal allowance), then 20% basic rate to £50,270, 40% higher rate to £125,140, and 45% additional rate above that. The personal allowance tapers by £1 for every £2 earned above £100,000, creating an effective 60% marginal rate between £100,000 and £125,140.
How pension drawdown works. From age 55 (rising to 57 from April 2028), you can withdraw funds from a DC pension in three ways: (1) Take 25% as a tax-free Pension Commencement Lump Sum (PCLS) and place the rest in 'flexi-access drawdown'; (2) Take Uncrystallised Funds Pension Lump Sums (UFPLS) — 25% of each withdrawal is tax-free, 75% is taxed; (3) Buy an annuity. Drawdown gives flexibility but requires investment management, while annuity gives certainty but limited flexibility.
The 4% rule — and why it might not work in 2026. The 4% rule (Bengen 1994) says you can withdraw 4% of your initial pot annually, inflation-adjusted, with high probability of pot lasting 30 years. Recent UK research (Cazalet, PFS) suggests 3.5% is safer given: lower bond yields, longer lifespans, sequence-of-returns risk. £400k pot at 4% = £16,000/year for 30 years. At 3.5%, £14,000/year. Combine with State Pension (£12,500/year) and modest 4-5% withdrawal feels safer than relying on pension alone.
Sequence-of-returns risk explained. Early bad investment returns devastate drawdown pots more than late bad returns. Two pensioners with same average 7% return over 30 years can have very different outcomes if one suffered -20% in year 1 vs year 29. The first runs out years earlier because they sold low when also withdrawing. Mitigations: (1) hold 2-3 years of cash withdrawal buffer to avoid selling investments in a crash; (2) reduce equity allocation as you approach retirement; (3) consider partial annuitisation for guaranteed income floor.
Tax on drawdown — the 75% reality. Only 25% of your pension is tax-free (the PCLS or 25% of each UFPLS). The other 75% is taxed as income when withdrawn. Strategic withdrawals matter: take just below your tax bands to minimise rate (use PA £12,570 + basic rate band). Combined with State Pension £12,500, you can take £12,570 - £12,500 = £70 tax-free, then £37,700 at 20% basic rate (£7,540 tax) from your pension — generating £37,700 + £70 + £12,500 = £50,270 gross with only £7,540 tax (15% effective).
Drawdown from a £300,000 pension pot at age 60
- Tax-free lump sum (25%): £300,000 x 25% = £75,000
- Remaining drawdown fund: £225,000, invested at assumed 5% growth minus 0.5% charges
- Annual withdrawal of £12,000 (approx 5.3% of drawdown fund)
- With State Pension of £11,500/year from age 66 and personal allowance of £12,570, drawdown taxed at 20% = £2,400 tax on £12,000 withdrawal
- Projected pot duration at this withdrawal rate: approximately 28 years (to age 88)
Source: GOV.UK
Frequently Asked Questions
- What's the 4% safe withdrawal rate?
- Often-cited 'Trinity Study' rule: withdraw 4% of pension pot in year 1, then increase 2-3% annually for inflation — historically sustained 30-year retirement with high probability. £500,000 pot = £20,000 year 1, rising with inflation. UK studies suggest more conservative 3.5-3.7% given higher inflation and lower bond yields. Above 4.5%: 'sequence risk' — early market crashes can exhaust pot 10+ years sooner. Below 3%: sustainable but income may be lower than needed.
- Drawdown vs annuity — which is better?
- Drawdown: pension stays invested, take income flexibly, pass to family on death. Annuity: guaranteed lifetime income, no investment risk, no inheritance (unless joint-life). Most UK retirees 2026: drawdown for active years (60s-70s), annuity for later (75+) when annuity rates higher and decisions harder. Hybrid: keep some in drawdown + buy small annuity covering essential bills. Best annuity rates 2026: ~6-7% at age 65 single-life level.
- How are pension drawdowns taxed?
- First 25% of pot is tax-free (up to £268,275 lifetime). Remaining 75% drawn as taxable income at marginal rate (20%/40%/45%). State Pension £12,000 + drawdown £25,000 = £37,000 total → tax £4,886 (basic rate). Keep withdrawals under £50,270 to stay basic rate. Higher-rate trap above. Drawing pot quickly into high tax bands wastes thousands — phased withdrawals over 10-20 years more tax-efficient than lump-sum approach.
- Sequence of returns risk explained.
- Same average return, different ORDER = vastly different outcomes if drawing income. Sample: £500k pot, 4% withdrawal, 6% average return. If first 3 years return −15%/−10%/−5% then average up: pot exhausted year 22. If first 3 years +20%/+15%/+10% then average down: pot lasts 40+ years. Same average, same withdrawals — different sequence. Mitigation: cash buffer 1-2 years' expenses (don't sell during crashes); flexible withdrawals (cut spending in down years); higher bond allocation early in retirement.