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UK pension drawdown calculator: is my pot enough?
Is £900,000 at 55 enough for £45,000 a year? With the full State Pension from 67, a 5% return and 2.5% inflation, it runs out at 81. About £37,500 a year lasts to 95 at a steady return, and £28,000 lasts in 90% of 1,000 random market paths. Enter your own pot below: every withdrawal is taxed with the UK rules, including the 25% tax-free part, the £268,275 Lump Sum Allowance and allowances frozen to April 2031.
Full new State Pension: £250.70 a week from April 2027. Your State Pension age is filled in from your age (born in 1972 = 67); check your forecast for your own amount.
Volatility is how much returns swing from year to year: about 10% suits a balanced fund; use 15% or more for mostly shares. The return, inflation and volatility are your assumptions, not forecasts.
Your money lasts to age
To make £45,000 last to 95 at a steady 5%, you would need to spend about £7,500 a year less, retire later or find other income.
Three ways to take your 25% tax-free cash
| Method | Lasts to | Spending that lasts | Income tax (today’s £) |
|---|---|---|---|
| Take 25% up front + use your allowance each year | 81 | £37,500 | £201,834 |
| 25% of each withdrawal tax-free (UFPLS) | 81 | £37,000 | £186,380 |
| Take 25% up front, spend it first | 80 | £37,000 | £213,708 |
Steady return. Income tax is summed to the age the money runs out, so a plan that lasts longer can show more tax.
Year by year (today’s money)
| Age | State Pension | From pension | Tax-free part | Income tax | From cash and ISAs | Pension left | Cash and ISAs left |
|---|---|---|---|---|---|---|---|
| 55 | £0 | £12,570 | £0 | £0 | £32,430 | £695,552 | £202,199 |
| 56 | £0 | £12,263 | £0 | £0 | £32,737 | £699,640 | £172,757 |
| 57 | £0 | £11,964 | £0 | £0 | £33,036 | £704,141 | £142,283 |
| 58 | £0 | £11,672 | £0 | £0 | £33,328 | £709,060 | £110,759 |
| 59 | £0 | £11,672 | £0 | £0 | £33,328 | £714,098 | £78,467 |
| 60 | £0 | £11,672 | £0 | £0 | £33,328 | £719,258 | £45,387 |
| 61 | £0 | £11,672 | £0 | £0 | £33,328 | £724,545 | £11,500 |
| 62 | £0 | £39,308 | £0 | £5,527 | £11,219 | £700,944 | £0 |
| 63 | £0 | £55,549 | £0 | £10,549 | £0 | £659,714 | £0 |
| 64 | £0 | £55,549 | £0 | £10,549 | £0 | £617,478 | £0 |
| 65 | £0 | £55,549 | £0 | £10,549 | £0 | £574,212 | £0 |
| 66 | £0 | £55,549 | £0 | £10,549 | £0 | £529,891 | £0 |
| 67 | £13,036 | £42,513 | £0 | £10,549 | £0 | £498,177 | £0 |
| 68 | £13,036 | £42,513 | £0 | £10,549 | £0 | £465,689 | £0 |
| 69 | £13,036 | £42,513 | £0 | £10,549 | £0 | £432,410 | £0 |
| 70 | £13,036 | £42,513 | £0 | £10,549 | £0 | £398,318 | £0 |
| 71 | £13,036 | £42,513 | £0 | £10,549 | £0 | £363,395 | £0 |
| 72 | £13,036 | £42,513 | £0 | £10,549 | £0 | £327,620 | £0 |
| 73 | £13,036 | £42,513 | £0 | £10,549 | £0 | £290,973 | £0 |
| 74 | £13,036 | £42,513 | £0 | £10,549 | £0 | £253,431 | £0 |
| 75 | £13,036 | £42,513 | £0 | £10,549 | £0 | £214,974 | £0 |
| 76 | £13,036 | £42,513 | £0 | £10,549 | £0 | £175,579 | £0 |
| 77 | £13,036 | £42,513 | £0 | £10,549 | £0 | £135,224 | £0 |
| 78 | £13,036 | £42,513 | £0 | £10,549 | £0 | £93,884 | £0 |
| 79 | £13,036 | £42,643 | £0 | £10,680 | £0 | £51,398 | £0 |
| 80 | £13,036 | £43,317 | £0 | £11,354 | £0 | £7,168 | £0 |
| 81 | £13,036 | £6,994 | £0 | £1,671 | £0 | £0 | £0 |
| 82 | £13,036 | £0 | £0 | £273 | £0 | £0 | £0 |
| 83 | £13,036 | £0 | £0 | £273 | £0 | £0 | £0 |
| 84 | £13,036 | £0 | £0 | £273 | £0 | £0 | £0 |
| 85 | £13,036 | £0 | £0 | £273 | £0 | £0 | £0 |
| 86 | £13,036 | £0 | £0 | £273 | £0 | £0 | £0 |
| 87 | £13,036 | £0 | £0 | £273 | £0 | £0 | £0 |
| 88 | £13,036 | £0 | £0 | £273 | £0 | £0 | £0 |
| 89 | £13,036 | £0 | £0 | £273 | £0 | £0 | £0 |
| 90 | £13,036 | £0 | £0 | £273 | £0 | £0 | £0 |
| 91 | £13,036 | £0 | £0 | £273 | £0 | £0 | £0 |
| 92 | £13,036 | £0 | £0 | £273 | £0 | £0 | £0 |
| 93 | £13,036 | £0 | £0 | £273 | £0 | £0 | £0 |
| 94 | £13,036 | £0 | £0 | £273 | £0 | £0 | £0 |
| 95 | £13,036 | £0 | £0 | £273 | £0 | £0 | £0 |
Worked example: £900,000 at 55, £45,000 a year
This is the question a FIREUK forum member asked after being told they might be made redundant at 55: “Is £900k+ enough for a £40-50k lifestyle?” Assumptions: £900,000 in pensions, no other savings, the full new State Pension (£250.70 a week) from 67, England, a 5% return after charges, 2.5% inflation, money taken at the start of each year, plan to 95.
- Tax-free cash: 25% of £900,000 = £225,000, well under the £268,275 Lump Sum Allowance.
- First year: £12,570 of taxable pension (taxed at 0% inside the personal allowance) plus £32,430 of the tax-free cash. Income tax: £0.
- How long it lasts: to 81 with a steady return. Only 16% of 1,000 random market paths (10% volatility) last to 95, and in the worst 10% the money is gone by 72.
- What does last: £37,500 a year to 95 with a steady 5%, or £28,000 a year to survive 90% of the market paths.
- At £40,000 a year: lasts to 90 with a steady return, and in 36% of market paths.
So on these assumptions £900,000 is enough for the low end of “£40-50k” with little margin, and not for £45,000 to 95. The State Pension from 67 does a lot of the work: it replaces about £13,000 of withdrawals a year for life.
How each withdrawal is taxed
- 25% tax-free, once. You can usually take a quarter of your pension tax-free, at most £268,275 over your lifetime (the Lump Sum Allowance), either all at the start (a pension commencement lump sum) or as 25% of each uncrystallised funds pension lump sum until the allowance is used.
- The rest is income. Taxable withdrawals are added to your State Pension and any other income and taxed at 20%, 40% or 45% above the £12,570 personal allowance (lost at £1 for every £2 over £100,000). Scotland has six bands from 19% to 48%.
- Frozen allowances. The personal allowance and basic rate band stay the same until April 2031 (Finance Act 2026 s.10); after that we raise them with inflation. As the State Pension rises, it uses more of a frozen allowance: the full rate from April 2027 is £13,036 a year, already above £12,570.
- Emergency tax on the first withdrawal. Providers often tax a first flexible withdrawal on an emergency code, taking too much. You can claim it back straight away or wait for the end of the tax year. Our figures are the tax you finally owe.
- Paying in afterwards. Taking taxable cash from drawdown or a UFPLS triggers the money purchase annual allowance (£10,000 a year), which matters if you plan to keep working and saving.
What the calculator assumes
- One person. For a couple, run it for each of you (each has a personal allowance and a Lump Sum Allowance), or use the couple calculator.
- Withdrawals at the start of each tax year from 2027-28; what is left grows at your return. Tax-free cash and ISAs are spent after pension money (except when the method says to spend the tax-free cash first) and grow tax-free, as they would in ISAs (£20,000 a year can go in).
- The State Pension and any other pension rise with inflation. The triple lock has often given more.
- You can draw from 55, or 57 from 6 April 2028 (Finance Act 2022 s.10); we assume a pension already started before then carries on. Protected pension ages are not modelled.
- Not included: Marriage Allowance, tax on savings interest and dividends outside ISAs, annuities, and inheritance tax on unused pensions, which counts for deaths from 6 April 2027.
Frequently asked questions
Is £900,000 enough to retire at 55 in the UK?
For £45,000 a year after tax, probably not on its own. With the full new State Pension from 67, a 5% return after charges and 2.5% inflation, £900,000 at 55 runs out at 81; spending that lasts to 95 is about £37,500 a year, and £28,000 lasts in 90% of our 1,000 random market paths. At £40,000 a year it lasts to 90 at a steady 5%, and in 36% of the random paths. Change the inputs above for your own pot, spending and State Pension.
How is pension drawdown taxed in the UK?
You can usually take 25% of your pension tax-free, up to the Lump Sum Allowance of £268,275 over your lifetime. The rest is taxed as income in the year you take it, added to your State Pension and any other income: 0% on the first £12,570 (the personal allowance), 20% up to £50,270, 40% to £125,140 and 45% above (Scotland has its own bands). The allowance and bands are frozen until April 2031, so as the State Pension rises it uses up more of your allowance each year.
Should I take my 25% tax-free cash up front or with each withdrawal (UFPLS)?
It makes less difference than people think, and it depends on the rest of your plan. In the £900,000 example, taking 25% up front and drawing up to your personal allowance each year lasts to 95 at about £37,500 a year, taking 25% of each withdrawal tax-free (UFPLS) about £37,000, and spending the tax-free cash first £37,000. Taking it with each withdrawal keeps the tax-free part invested inside the pension, so it can grow; taking it up front lets you spend tax-free money while your allowance soaks up some taxable income at 0%. The calculator compares all three on your figures.
What is the personal allowance trick in drawdown?
If your other income is below £12,570, you can take that much taxable income from your pension each year and pay no tax on it. Before the State Pension starts, many people take the tax-free lump sum, live partly on it, and still draw up to their allowance each year so that slice of pension never gets taxed. Once the full State Pension (£13,036 a year from April 2027) starts, it uses the whole allowance, so every pound of taxable drawdown is taxed at 20% or more.
Will taking money from my pension affect how much I can pay in?
Yes, if you take taxable income. Taking cash from a flexi-access drawdown fund or an uncrystallised funds pension lump sum (UFPLS) triggers the money purchase annual allowance: you can then pay only £10,000 a year into defined contribution pensions with tax relief. Taking just the tax-free lump sum and leaving the rest in drawdown does not trigger it.
When can I take my pension?
From 55 today. The normal minimum pension age rises to 57 on 6 April 2028, unless your scheme gives you a protected pension age. The calculator stops anyone under the minimum age from drawing, and assumes that if you start before April 2028 you can carry on (check with your scheme).
Why does the calculator show two spending figures?
The first assumes the same return every year. Real markets swing, and losses early in retirement hurt most because you are selling to live. So we also run 1,000 random market paths centred on your return with the volatility you choose, and find the spending that lasts in 90% of them. In the example that is £28,000 a year against £37,500 with a steady return.
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