Pension Drawdown Calculator UK
Calculate how long your pension pot will last in drawdown. Plan your retirement income strategy with projections for growth, inflation, and tax.
What is pension drawdown?
Pension drawdown (also called income drawdown or flexi-access drawdown) lets you keep your pension invested while taking money out as and when you need it. You can take 25% tax-free upfront, then withdraw the rest as taxable income over time.
Is there a lifetime allowance anymore?
No, the Lifetime Allowance was abolished from April 2024. There's no longer a limit on how much you can have in your pension. However, the tax-free lump sum is now capped at £268,275 (25% of the old £1,073,100 LTA).
What is the 4% rule for pension drawdown?
The 4% rule suggests withdrawing 4% of your pot in year 1, then increasing that amount by inflation each year. Research suggests this gives a high probability of your money lasting 30+ years. However, it's not guaranteed and depends on investment returns.
How is pension drawdown income taxed?
The first 25% is tax-free. After that, withdrawals are added to your other income and taxed accordingly. You get your Personal Allowance (£12,570), then pay 20% basic rate, 40% higher rate (over £50,270), or 45% additional rate (over £125,140).
Should I buy an annuity or use drawdown?
Drawdown offers flexibility and potential for growth, but your income isn't guaranteed and you bear investment risk. Annuities provide guaranteed income for life but no flexibility. Many people use a combination - some drawdown for flexibility and an annuity for essential expenses.