Pensions
Pension drawdown sustainability calculator
How long will your pension pot last if you take an income from it? This calculator runs a year-by-year projection at the growth, inflation and withdrawal rate you choose, and shows your result against the classic ‘4% rule’ benchmark.
Pot runs out after about 21 years.
Initial withdrawal rate: 6.00%. This is above the 4% rate commonly used as a sustainability rule of thumb.
- Years pot lasts
- 21
- Total withdrawn
- £488,694
- Balance at end
- £0
| Year 1Took £18,000 that year. | £296,100 |
|---|---|
| Year 15Took £25,434 that year. | £146,922 |
| Total withdrawn over the period | £488,694 |
A deterministic projection assumes constant growth and inflation — real markets are volatile and can deliver a poor first decade (“sequence-of-returns risk”) that exhausts pots faster than this. The 4% rule is a planning guide, not a promise. Taxable drawdown counts as Income Tax, and triggers the £10,000 Money Purchase Annual Allowance.
How it works
- Each year we subtract your withdrawal from the pot, grow what is left at your chosen rate, and then increase next year's withdrawal in line with inflation so your spending keeps its real value.
- We mark a 4% (or lower) starting withdrawal rate as broadly sustainable. The Bengen study (1994) found a 4% starting rate, rising with inflation, lasted 30+ years in the worst historical 30-year US window.
- The result is deterministic — real markets are volatile. A poor first decade (‘sequence-of-returns risk’) can exhaust pots faster than a smooth projection suggests.
Common questions
- Is the 4% rule still valid?
- It is a planning benchmark, not a guarantee. Some research using UK data and current valuations suggests a starting rate closer to 3–3.5% may be safer for a 30-year retirement; others argue 4% remains reasonable if you can flex spending in poor years.
- Should I combine drawdown and an annuity?
- Many advisers suggest using an annuity to cover essential spending and drawdown for flexibility on the rest. We do not give advice — this is a common framing, not a recommendation.
- What growth rate should I use?
- For a balanced or equity-heavy pension portfolio, 4–6% nominal (above cash but well below historical equity returns) is a common planning assumption. Use 2–3% if you are heavily in cash or bonds.