Hargreaves Lansdown

Drawdown calculator

With drawdown you take income directly from the pension fund, which stays invested. Use this simple calculator to help you decide what income withdrawals might be sustainable, and when you might run out of money. We've made some assumptions on the growth rates but you should customise these to meet your own expectations and intended investment strategies.

Important: Drawdown is a more complex option than an annuity. What you do with your pension is an important decision: you could run out of money. Make sure you understand your options and check they are suitable for your circumstances: take appropriate advice or guidance if you're unsure. Our service is not personal advice but we can offer advice if you specifically request this. The Government's free Pension Wise service can also help - more on Pension Wise.

Your details

0%25%
Please confirm the value of the pensions you are thinking of using for drawdown.
You have the option of taking an initial taxable lump sum from the pension. This will be subject to income tax.
The maximum tax-free cash you can take is usually 25%. You can decide how much to take.
Under the new pension freedoms there is no cap on how much income you can take. This income will be subject to income tax.
Change this percentage to see how different rates of growth will affect your pension. See the notes in the 'Important information' box for important information. A 1% investment charge will also be deducted.
Change this age to see how the age you might die could affect your pension. See the notes in the ‘Important information’ box for important information.
The red line shows the investment growth percentage you have chosen. The other two lines show the effects of the growth being 3% higher (the green line) or 3% lower (the purple line).
The blue line shows the total tax-free cash and income (before tax) withdrawn over time.

Important information

For these calculations we've made some initial assumptions about your net investment growth and life expectancy. You should customise these assumptions to your own personal circumstances. The assumptions we have made do not constitute personal advice and are not based on your individual circumstances. They are simply a starting point for your own retirement decisions. Making decisions based on unrealistic assumptions will increase the risk of running out of money.

We have assumed investment growth of 5% with charges of 1% (i.e. 4% net). 5% is the mid-growth rate suggested by the FCA for pension illustrations. 1% is a typical investment charge. Past performance is not a guide to future returns.

We have assumed life expectancy based on age, gender and date of birth (source: 2012 - based Cohort Expectation of Life, 2010-2012, United Kingdom, Office for National Statistics). You might wish to make provision for your retirement income to continue to provide for you if you live longer than you might expect.

Please remember investment growth may be higher or lower than this. You may also live longer or for less time than you expect.

What income might you take?

How much income you take is entirely down to you. One way is to take only the income generated by the underlying investments, leaving the underlying capital intact to hopefully grow, although its value could fall as well. Taking income in this way is called drawing the 'natural yield'. As an example the natural yield for the UK stock market is currently around 3.38%*. This yield is historic and will vary in future; it is not guaranteed.

This is provided to help you make your own decisions on what income to take, but you need to also factor in your attitude to risk and the nature of the investments you have chosen.

Taking more than the natural yield from your drawdown pension might mean selling investments and withdrawing from capital, which increases the risk of you running out of money later on in retirement which could seriously impact your lifestyle. Withdrawals are taxed as income. Don’t forget, you don’t have to take any income if you don’t want to: you could simply take the tax-free cash and leave the rest invested.

*Annual yield of FTSE All Share 3.38% March 2015, source FT.