Pension Drawdown Calculator 2025/26
Find out how long your pension pot will last in drawdown at your planned withdrawal level, what a sustainable income looks like at different growth rates, and how the 25% tax-free lump sum affects your taxable income in retirement.
How pension drawdown works
With flexi-access drawdown, you keep your pension pot invested and withdraw money as you need it. You can take up to 25% of your pot as a tax-free lump sum (capped at £268,275 — the Lump Sum Allowance). The remainder stays invested and withdrawals are taxed as income. Unlike an annuity, the pot remains yours and can be passed on to beneficiaries.
The key risk is sequence of returns risk — poor investment returns early in retirement can deplete a pot much faster than the average return suggests. Many advisers recommend a sustainable withdrawal rate of around 3.5–4% of the initial pot per year to give high confidence the pot will last 25–30 years.
The “4% rule” (withdraw 4% of your pot each year, adjusted for inflation) was developed from US data and doesn’t translate perfectly to the UK — UK equity returns have historically been slightly lower than US returns, and State Pension timing differs. UK financial planners generally suggest 3.5% as a more cautious sustainable rate for a 30-year retirement, though this depends heavily on your asset allocation, fees, and flexibility to reduce withdrawals in poor market years.
