How a pension drawdown calculator works
Pension drawdown lets you keep your pension pot invested while withdrawing money as and when you need it. A drawdown calculator helps you understand how much you could take as a tax-free lump sum, and how much income your remaining pot might reasonably provide over time.
Because everyone’s circumstances are different, it’s important to speak with a regulated adviser who can look at the full picture. They will take into account things like your pension size, your tax position, your other income, how long you want your pot to last and how comfortable you are with investment risk. They’ll then create personalised calculations showing:
- how much you could take without paying unnecessary tax
- how much income your pension could support each year
- the impact of different withdrawal strategies
- how long your pot might last under different scenarios
This means you get clear, tailored guidance based on your goals not just a generic estimate.
What your drawdown options might look like
While your exact figures depend on your personal circumstances, most people who use pension drawdown begin by taking up to 25% of their pot tax-free. The remaining amount stays invested and can provide a flexible income throughout retirement.
A regulated adviser will calculate:
- how much you could take as a lump sum
- how much income your pot could reasonably support
- the tax impact of different choices
- how long your pension might last under different scenarios
Speaking to an FCA-regulated adviser is so important as they can help you decide whether drawdown, an annuity, or a combination of both is the best fit for your retirement. Drawdown isn't right for everyone. Your income isn’t guaranteed, and your pot could run out if investments underperform or you withdraw too much. It also requires ongoing management to keep your plan on track.
Things to consider
- Your income isn’t guaranteed
Unlike an annuity, your pot could run out if markets fall or you withdraw too much. - Investment risk
Investments can fall as well as rise, and you may get back less than you invest. An adviser will explain the risks and options. - Ongoing management
Drawdown needs regular reviews to make sure your plan stays on track. - Inflation impact
Withdrawals may need adjusting to keep pace with rising costs.
Why use My Pension Choices?
Making decisions about your pension is important, and getting the right advice can make all the difference. Our service connects you with trusted, FCA-regulated advisers who are ready to help you navigate your pension choices.
- Free and impartial - There’s no charge for using our service, we’ll match you with a qualified adviser at no cost to you.
- Quick and convenient - It takes less than a minute to be matched with an adviser who understands your needs.
- Advisers near you - Our nationwide network means you’ll be connected with someone local, so you can choose how and when to speak.
How it works?
It couldn't be simpler, start by completing our online form so we can get a better understanding of how we can help.
We will use the information that you provide us with to match you with the best pension adviser for you.
You’ll hear from your local adviser shortly to book your free consultation with no pressure to proceed.
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Why expert advice on drawdown matters
An FCA-regulated adviser can help you:
- Avoid running out of money too soon by creating a sustainable withdrawal strategy based on your pot size, lifestyle needs, and life expectancy.
- Withdraw income in the most tax-efficient way helping you use your 25% tax-free cash wisely and structure withdrawals to minimise tax bills.
- Balance drawdown with annuities for security combining flexible access with the certainty of guaranteed income for essentials.
- Protect your pension savings for your family ensuring your remaining pot can be passed on tax-efficiently, so more goes to your loved ones.
Frequently asked questions
Pension drawdown (also called flexi-access drawdown) lets you keep your pension invested while taking income when you need it. Unlike an annuity, your income isn’t fixed so you choose how much to withdraw.
Yes. In most cases, you can take up to 25% of your pension pot tax-free before moving the rest into drawdown.
Yes, if you withdraw too much too quickly or if investments don’t perform well. That’s why advice and regular reviews are so important.
Any money left in your drawdown pot can usually be passed on to your beneficiaries, often in a tax-efficient way.
It depends on your circumstances. Drawdown gives you flexibility and growth potential, but your income isn’t guaranteed. Annuities provide certainty but less flexibility. Many people use a mix of both.
While it’s not always legally required, it’s strongly recommended. An FCA-regulated adviser can help you avoid paying unnecessary tax, create a sustainable withdrawal plan, and decide whether drawdown, annuity, or a combination works best for you.
* Rule changes in 2027 mean other gifting strategies may be worth considering with professional advice.
[2] According to research conducted by Royal London and ILC
(images for illustration/example purposes only)