How long could your pension last? Read drawdown scenarios carefully
Learn how withdrawals, inflation and investment assumptions affect a pension drawdown illustration.
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Treat a projection as a scenario
A drawdown calculator is useful for exploring how a pension pot changes under selected assumptions. A smooth line is not a prediction of real investment results. Before interpreting the ending balance, check the withdrawal timing, growth convention, fees and whether tax is included. Different calculators can use different conventions while describing the same broad idea.
Start with arithmetic you can check
With GBP 1,200, no return and GBP 100 withdrawn at each month end, the pot reaches zero after 12 payments. This simple example gives you a way to check the meaning of depletion. Introducing a return, a larger opening balance or increasing withdrawals changes that timeline. The inputs are hypothetical and do not describe a suitable pension strategy.
Separate spending from gross withdrawals
The amount withdrawn from a pension is not necessarily the amount available to spend after tax. A tool that excludes tax should not be used as a take-home-income quotation. If you have already taken a lump sum, enter the remaining pot rather than counting the same money twice. Keep other income, such as a supplied State Pension forecast, on a separate line in the household budget.
Explore uncertainty rather than one best-looking result
Try a lower return, a higher initial withdrawal and a larger annual withdrawal increase. Record which assumption changes the result most. Even these scenarios do not show sequence-of-returns risk: the order of actual gains and losses can matter when money is being withdrawn. A constant-return tool cannot prove that a withdrawal level is sustainable.
Know when to seek a different tool
Our development model applies a fixed effective monthly return and an inflation-linked withdrawal, before tax. It does not compare annuity quotations or model every retirement-income option. Use it to prepare questions and understand assumptions, then check current pension guidance and obtain suitable support before making irreversible choices.
Try the related calculator
Use your own assumptions to explore the example. The calculator states its scope and exclusions.
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Sources checked on the article date. Illustrative values are fictional. No current-rate, individualized-advice or ranking claim is made.