United Kingdom · Worked example
How Long Will a £300,000 Pension Last?
At an initial £1,500 gross withdrawal each month, this illustrative £300,000 pot runs out around age 85y 3m. Starting at 65, that is roughly twenty years. Reducing the withdrawal changes the result substantially.
Assumptions you can reproduce
Start at age 65 with £300,000 available for drawdown and plan to age 95. The illustrative annual return is 5% before a 0.6% annual percentage fee; inflation is 2.5%. Withdrawals increase once a year with inflation. Other taxable income and State Pension start at £0. The example uses England, Wales and Northern Ireland income-tax bands for 2026/27, held fixed in future years.
The base case removes no upfront cash and treats every drawdown payment as taxable. It does not grant a fresh tax-free percentage on each payment. This is a simplified drawdown model, not phased crystallisation or UFPLS. No later contributions or guaranteed pension product are included.
Three withdrawal amounts, the same starting pot
| Initial monthly gross withdrawal | First-year net monthly income | Modelled depletion |
|---|---|---|
| £1,000 | £1,000 | Not depleted before age 95 |
| £1,500 | £1,410 | Age 85y 3m |
| £2,000 | £1,810 | Age 79y 5m |
The £1,000 row still has money at 95; it does not establish that the pot lasts forever. The higher rows finish earlier because withdrawals and their annual inflation increases remove more capital. State Pension is zero in every row, so none of these figures describe a household's complete retirement income.
Why a gross withdrawal differs from spending money
£1,500 a month means £18,000 of taxable withdrawals in year one. With no other income and a £12,570 allowance, the simplified tax estimate is (£18,000 − £12,570) × 20% = £1,086. That leaves £16,914 for the year, or £1,409.50 a month. Actual tax codes and PAYE timing can differ.
A separate budget for the first twelve months
The calculator also solves for a level budget through age 95. Under the same assumptions it starts at £12,367 a year, about £1,031 a month after estimated tax. This budget is separate from the £1,500 gross withdrawal you entered. It adjusts withdrawals to preserve purchasing power and account for the model's fixed future tax bands.
Keeping tax thresholds fixed can increase tax over time as nominal withdrawals rise. That is a modelling assumption, not a prediction of government policy. Compare the first-year budget and the fixed-withdrawal projection as two different questions.
What if I retire two years earlier?
Compare the same £300,000 available at each starting age, with no State Pension. Starting at 63 adds two years of withdrawals compared with 65. All three budgets below run to 95 and are after estimated tax.
| Scenario | Start → end age | First-year annual budget | First-year monthly budget | Try the figures |
|---|---|---|---|---|
| Start at 63 | 63 → 95 | £11,833 | £986 | Try: Start at 63 |
| Start at 65 · base case | 65 → 95 | £12,367 | £1,031 | Try: Start at 65 · base case |
| Start at 67 | 67 → 95 | £12,969 | £1,081 | Try: Start at 67 |
This isolates the length of retirement. It does not project what today's balance becomes while you keep working: earnings, extra contributions and investment returns before the chosen start date are excluded. Check your own pension access conditions separately.
How much does an extra 0.5 percentage points in fees change?
Keep the 5% return assumption, age 65–95 and inflation unchanged. Raising fees from 0.6% to 1.1% adds 0.5 percentage points. On the initial £300,000, that is £1,500 more per year if the balance were unchanged; the model instead applies the fee as the balance changes.
| Scenario | Start → end age | First-year annual budget | First-year monthly budget | Try the figures |
|---|---|---|---|---|
| 0.6% annual fee | 65 → 95 | £12,367 | £1,031 | Try: 0.6% annual fee |
| 1.1% annual fee | 65 → 95 | £11,626 | £969 | Try: 1.1% annual fee |
| 1.6% annual fee | 65 → 95 | £10,901 | £908 | Try: 1.6% annual fee |
The lower spending figure includes the effect of fees throughout retirement. It is not simply the first year's fee difference subtracted from the budget. Provider, fund and advice charges may use different bases; enter a comparable total and avoid deducting a fee twice if your return estimate already includes it.
What changes if I plan to age 100?
| Scenario | Start → end age | First-year annual budget | First-year monthly budget | Try the figures |
|---|---|---|---|---|
| Plan to 90 | 65 → 90 | £14,044 | £1,170 | Try: Plan to 90 |
| Plan to 95 · base case | 65 → 95 | £12,367 | £1,031 | Try: Plan to 95 · base case |
| Plan to 100 | 65 → 100 | £11,135 | £928 | Try: Plan to 100 |
Extending the horizon spreads the same starting assets over more payments. It does not predict your lifespan. Compare the longer-horizon figure with essential expenses before treating any modelled surplus as flexible spending.
What this example cannot tell you
Returns arrive smoothly every month in this model. Real markets can fall early in retirement, and the order of returns matters when money is being withdrawn. The calculation does not estimate a probability of success. A budget that exhausts capital near the chosen end age leaves no modelled reserve for living longer, large repairs, care costs or an inheritance.
Try a lower return, higher costs and a longer horizon. Check pension access with your provider and compare essential expenses with reliable income. These are invented educational scenarios, not recommended spending levels or personal financial advice.
This link loads only the invented example above. Your own entries are never added to the link. Figures in the article are rounded to whole currency units; the model calculates with unrounded values.
Sources and review record
The official pages below were checked on for the specific statements described. The numerical scenarios are our calculations, not government forecasts. No independent financial or native-language reviewer has approved this material.
- GOV.UK: Income Tax rates and Personal Allowances — the standard allowance and non-Scottish bands used in these examples.
- GOV.UK: tax-free pension withdrawals — the usual 25% rule and standard lump sum allowance; individual protection can differ.
- GOV.UK: State Pension forecast and State Pension age — obtain your own amount and date.
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