Pension Income Projection Calculator

A 500,000 pot drawn at 4% a year pays 20,000 a year — roughly 1,667 a month. At 5% the monthly rises to 2,083, but the pot depletes faster. The classic '4% rule' comes from research (the Bengen study) and assumes a diversified portfolio with some equity exposure.

How to use it

Enter the pot value at retirement and the drawdown rate you plan to use. Drawdown rates above 5% significantly increase the risk of outliving the pot; rates below 3% leave income on the table that you're unlikely to need given typical longevity.

What the result means

Primary is annual income from the pot. Secondary shows monthly, the implied years the pot lasts at constant real withdrawals (1 divided by the rate, roughly), and the pot size. Note: sequence of returns risk — bad markets early in retirement — can significantly reduce pot longevity even when the rate 'should' be safe.

What this doesn't model

Sequence risk, inflation above the rate, state pension, investment fees, tax treatment in drawdown. Real retirement income planning needs all of these; the tool gives the first-order estimate before more detailed analysis.

Quick example

With pension pot value of 500,000 and drawdown rate of 4%, the result is 20,000.00. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Pension Pot Value and Drawdown Rate. Not every input has equal weight. Adjusting one input at a time toward extreme values shows which ones move the result most.

What's happening under the hood

Annual income equals pot value times drawdown rate. Pot longevity shown as the simple inverse of the rate (e.g., 4% implies roughly 25 years of constant real withdrawals in a steady market) — a rule of thumb, not a guarantee. Does not model investment growth or sequence risk. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

Turning the result into a plan

A projection is just a starting point. The real work is setting the monthly amount aside automatically so the saving happens before you can spend it. Most people who hit savings goals set up a standing order on payday; most who miss them rely on willpower at month-end.

What this doesn't capture

The calculation assumes a steady savings rate and a stable interest rate. Real saving journeys include emergencies, windfalls, and rate changes — especially in easy-access products. The figure is a direction of travel, not a guarantee.