Pension drawdown calculator
See how long your pension could last you in retirement
Get a more accurate estimate by answering these questions
You have several options when deciding what to do with your pension pot when you retire. First, you can buy an annuity with it, which gives you a guaranteed income for life. The second option is to buy a plan that offers you a guaranteed income for a set period. But the third option – a pension drawdown – is our focus here.
In addition to answering your pension drawdown questions, this page also features a pension drawdown calculator that shows you how long your pension pot could last if you choose to take the drawdown approach. You’ll find the calculator at the top the page.
What is pension drawdown?
You can take money out of your pension pot at any time from the age of 55 (or 57 from April 2028). If you decide to do this, you can take up to 25% of it as a tax-free lump sum and use the rest to give you an income in retirement.
Rather than using the whole of this amount to buy a guaranteed income – as you would with an annuity – you can keep it invested and just take money out as and when you need it, meaning that the invested sum could continue to grow. This approach is known as pension drawdown (or income drawdown or flexi-access drawdown).
How long will my pension last?
As you’re not buying a guaranteed income, there is a risk that your pension savings could run out if you go for the pension drawdown approach.
How long your pension pot will last depends on two key factors:
How much money remains invested after any lump sums are withdrawn (and hence how much your pension pot might continue to grow)
How and where you invest your money (which will affect the return you get on your investment)
It’s worth noting that you could even lose money if your investments don’t work out.
How much do I need to retire?
According to the industry body Pensions and Lifetime Savings Association, the minimum amount you need to live on when you retire is £14,400 as a single person and £22,400 as a couple. For a comfortable retirement, single people need £43,100 a year, while couples need £59,000.
Alternatively, the Department for Work and Pensions sets out the percentage of different salary levels you may need in retirement. For example, if you earn £12,200 to £22,399 a year, you may need 70% of this, while those earning £51,300 may need 50%. The exact amount will depend on the lifestyle you want. Inflation levels will also affect how far your money will stretch – if they’re high, it may reduce your spending power.
You can use our pension calculator to determine how much your pension pot could be worth when you retire. Bear in mind that you may also qualify for a state pension.
How to use the pension drawdown calculator
To find out how long your money could last if you opt for pension drawdown, enter the following details into the calculator at the top of this page:
The age you plan to retire
Your desired annual income in retirement (in other words, how much you would like to withdraw from your pension pot each year)
How much you expect to be in your pension pot when you retire (once you’ve taken your cash-free lump sum)
You can adjust the figures in the calculator to view different outcomes.
