Drawdown Calculator UK: Will Your Pot Last?

The hardest financial question in retirement is not "have I saved enough?" but "how long will what I have last?" Our drawdown calculator answers that question. Enter your starting pot, your annual withdrawal, your expected return and inflation, and the calculator simulates the life of your portfolio year by year. It tells you exactly when, if ever, the money runs out.

This is the most consequential calculation a UK retiree can run. Get it right and your pension lasts the rest of your life. Get it wrong and you discover the problem decades after you can do anything useful about it.

Contents

• What Drawdown Means in the UK
• How to Use the Drawdown Calculator
• What the Calculator Models
• Why Sequence of Returns Risk Matters
• How the State Pension Changes the Maths
• Common Use Cases
• Frequently Asked Questions

What Drawdown Means in the UK

Pension drawdown is the act of withdrawing money from your pension pot in retirement rather than buying an annuity. In the UK, since pension freedoms were introduced in 2015, you can leave your pot invested and take whatever amount you need each year, with the first 25% available tax-free.

The same principle applies to ISA withdrawals, though the tax treatment is different (everything you take from an ISA is tax-free). The calculator does not distinguish between pension and ISA pots; it models the total invested capital and the gross withdrawal you take each year.

For a deeper look at how drawdown rules and tax-free lump sums work, see pension tax-free lump sum and mortgage, which covers the trade-off between taking the 25% lump sum early or leaving it to grow.

How to Use the Drawdown Calculator

The calculator needs six pieces of information.

1. Starting Pot

The total invested across all your retirement assets at the point you start drawing down. Combine ISAs, SIPPs, workplace pensions, and any other investment accounts you plan to draw from. Cash held for short-term needs should not be included.

2. Annual Withdrawal

How much you plan to take out each year, in today's money. The calculator inflates this figure each year so the real income you receive stays constant.

A £30,000 annual withdrawal on a £750,000 pot is a 4% starting withdrawal rate, which is the textbook safe rate. UK retirees often use 3% to 3.5% for extra margin, especially in the early years.

3. Expected Annual Return

The real (post-inflation) return you expect on your portfolio. The default is around 5% to 6% for a balanced equity portfolio, lower if you are heavily in bonds. Use a conservative figure if you want to stress-test your plan.

4. Inflation Rate

The Bank of England targets 2% but UK inflation has averaged closer to 3% historically. Use 2.5% as a sensible middle estimate. Higher inflation erodes the real value of fixed pension income, so this lever has more impact than people expect.

5. Starting Age

Your age when you begin drawing down. The calculator runs forward year by year from this age until either your pot is exhausted or you turn 100.

6. State Pension (Optional)

The calculator lets you add State Pension income from a chosen age. A full UK State Pension is currently around £11,500 per year (rising annually under the triple lock). Once it kicks in, your portfolio withdrawal is reduced by the State Pension amount, which dramatically extends pot longevity.

What the Calculator Models

For each year of retirement, the calculator does four things.

1. Withdraws the year's spending need from the pot at the start of the year
2. Grows the remaining pot at your assumed return rate
3. Inflates next year's withdrawal need so the real income stays constant
4. Subtracts any State Pension income from the gross withdrawal once eligible

It returns a year-by-year balance and tells you how many years of income the pot supports. If your withdrawal rate is sustainable, the pot stays at or above the starting value in real terms forever. If not, you see exactly when the line crosses zero.

For a more conservative simulation that includes the impact of variable returns, our piece on sequence of returns risk explains the dynamic the calculator does not directly model.

Why Sequence of Returns Risk Matters

The calculator assumes a smooth average return. In reality, markets do not deliver 5% every year. They might deliver 25%, then -15%, then 10%, then -5%, averaging the 5% over time but not in a straight line.

This matters in retirement because withdrawing during a downturn locks in losses. A £30,000 withdrawal from a £600,000 pot down 20% means selling assets at a low. The pot recovers when the market does, but you have permanently shrunk the base that compounds.

Two retirees with identical 30-year average returns can end up in completely different places depending on the order of returns. The one who hits a recession in year 2 may run out of money. The one who hits the same recession in year 22 typically does not.

The practical defence is a 1 to 3 year cash buffer at the start of retirement so you can avoid selling stocks during a downturn. Some retirees go further and use a "rising glide path" that starts heavy in bonds and shifts toward equities over the first decade. The calculator does not model these strategies directly but the Beyond the 4% Rule guide covers them in detail.

How the State Pension Changes the Maths

A full UK State Pension is roughly £11,500 a year. For a retiree spending £30,000 a year, the State Pension covers nearly 40% of total income from State Pension age (currently 66, rising to 67 by 2028 and 68 by 2046).

That has a much bigger effect on portfolio longevity than people realise. If you start drawing at 60 with £700,000 and the State Pension kicks in at 67, your portfolio only needs to bridge the gap for those seven years and supplement the State Pension afterwards. The same starting position without a State Pension typically runs out a decade earlier.

The catch is that you need a full National Insurance record, usually 35 qualifying years, to receive the full amount. If you have gaps, our piece on find lost pensions UK covers how to track down missing contributions and check your forecast on the HMRC State Pension forecast tool.

Common Use Cases

Pre-retirement stress-test - If you are 5 years from retirement, run your projected starting pot through the calculator at 4%, 5%, and 6% real returns. The spread tells you how much your plan depends on optimistic assumptions.

Choosing a retirement age - The same pot at age 55 has to last about a decade longer than at age 65. The calculator makes the cost of an early retirement explicit.

Sequencing pension and ISA withdrawals - The calculator does not separate pots, but you can model two scenarios: one drawing down from ISAs first (preserving pension growth and inheritance benefits) and one drawing the pension first (potentially using the lower-rate tax bands). For the underlying logic, see our ISA-pension bridging guide.

Late-career career-break planning - If you are 60 and considering a 5-year career break before drawing down, model the pot you would have at 65 instead of 60 and see whether the difference is meaningful.

Frequently Asked Questions

Is 4% really safe for UK retirees?

The 4% rule was based on US data. UK markets have historically had lower returns and higher inflation, so a 3% to 3.5% withdrawal rate is more defensible for a 30+ year retirement. The drawdown calculator lets you test the difference directly. Our review of Wade Pfau's research on safe withdrawal rates covers the academic case for using a lower rate.

Does the calculator account for tax on pension withdrawals?

No. It models gross withdrawals. If you are drawing from a SIPP, the first 25% is tax-free and the remainder is taxed as income. To work out a realistic gross withdrawal, decide what after-tax income you need and gross it up using the take-home pay calculator with your retirement age tax position.

Can I model a variable withdrawal strategy?

Not directly. The calculator assumes a constant inflation-adjusted withdrawal. Real-world strategies like "spend more when markets are up, less when they are down" or the guardrails approach are more flexible but harder to model. The constant-withdrawal output gives you a reliable worst-case for those strategies, since most variable approaches improve on it.

What if I plan to leave money to my children?

Run the calculator with a slightly lower withdrawal rate so the pot ends well above zero rather than just reaching zero. A 3% withdrawal rate typically leaves a pot at the end of a 30-year retirement that is similar in real terms to where it started. That balance becomes your inheritance.

How does the State Pension triple lock affect my plan?

The triple lock means the State Pension rises by the higher of inflation, earnings growth, or 2.5% each year. The calculator inflates the State Pension at the same rate as your withdrawal need, which is a reasonable approximation. If you want to model a faster-growing State Pension, use a higher inflation rate.

Further Reading:

Die With Zero - Bill Perkins - The contrarian case for spending your portfolio down rather than building a legacy. A useful counterweight when the drawdown calculator tells you your pot will outlive you by decades. (Affiliate link - we may earn a small commission at no extra cost to you.)