A drawdown calculator estimates how long your pension pot might last based on your withdrawal amount, expected investment growth and life expectancy, but it’s a projection, not a prediction, and most tools quietly skip over the details that actually decide your income: how the 25% tax-free portion works, how the rest is taxed, and the risk of poor market returns hitting right when you start withdrawing. This guide explains what a drawdown calculator models well, what it typically gets wrong for UK savers, and works through real numbers at different pot sizes so you can sense-check whatever figure a calculator gives you.
What a drawdown calculator actually does
At its simplest, a drawdown calculator takes your starting pot, your planned annual withdrawal, an assumed rate of investment growth, and a rate of inflation, then projects year by year how the pot changes until it either runs out or outlasts your assumed lifespan. Some tools let you factor in fees, State Pension income, and other income sources; many of the free ones online don’t.
That’s a genuinely useful starting point, but it rests on an assumption that rarely holds in real life: a smooth, constant rate of return every single year. Markets don’t work that way, and the order in which good and bad years arrive matters enormously, which we’ll come back to under sequence of returns risk.
Is there a Martin Lewis pension drawdown calculator?
A lot of people search specifically for a “Martin Lewis pension drawdown calculator”, assuming MoneySavingExpert has built one. As of mid-2026, MoneySavingExpert doesn’t publish its own dedicated drawdown modelling tool. <cite index=”149-1″>What it does have is general guidance emphasising that up to 25% of your pension can usually be taken tax-free, and that spreading taxable withdrawals over multiple years can help manage your tax bill, alongside a recommendation to use the free, impartial Pension Wise guidance service before making decisions.</cite>
If you’re looking for a proper drawdown calculator specifically, providers like Hargreaves Lansdown, Prudential and AJ Bell offer free tools, and several independent sites run more detailed Monte Carlo style projections that stress-test a plan against thousands of historical market sequences rather than a single smooth growth rate. None of these replace regulated advice or the free, impartial Pension Wise guidance service, which is available to anyone 50 or over with a defined contribution pension.
The 25% tax-free element: what calculators oversimplify
When you first access a defined contribution pension, you can normally take up to 25% of it as a tax-free lump sum, known as the Pension Commencement Lump Sum. <cite index=”123-1″>This is capped at the Lump Sum Allowance of £268,275 under current rules.</cite> This is the headline figure almost every calculator gets right, but the mechanics around it trip a lot of people up.
There are two different ways the 25% tax-free portion can actually work:
- Take it all upfront, moving the rest of your pot into a flexi-access drawdown account. Only the money you then withdraw from that drawdown account is taxable, and it’s taxed as income in the year you take it.
- Take it gradually, using an Uncrystallised Funds Pension Lump Sum (UFPLS) for each withdrawal. <cite index=”121-1″>It’s taxed with 25% paid tax-free and 75% taxed as income immediately, so you never have to decide upfront how much tax-free cash to draw all at once.</cite>
Neither approach is universally better. Taking the full 25% upfront and investing or saving it separately gives you flexibility, but it also means that cash stops being inside a pension wrapper, which can matter for inheritance tax planning under current rules. Spreading tax-free cash via UFPLS keeps more of your pot growing within the pension, but each withdrawal is a taxable event that needs planning around your other income for that year.
How the rest is actually taxed
This is where most simple calculators stop being useful, because the 75% taxable portion of any withdrawal isn’t taxed in isolation. It’s added to whatever other income you have that tax year, including your State Pension, and taxed at your marginal rate under normal Income Tax bands.
For 2026/27, the personal allowance stands at £12,570, and it’s been frozen at that level for several tax years running, which matters more than it sounds. <cite index=”151-1″>The full new State Pension is being uprated to £241.30 per week for 2026/27, up from £230.25 in 2025/26.</cite> That works out at roughly £12,547.60 a year, which means it now uses up almost the entire personal allowance on its own, leaving only around £22 of headroom. Practically speaking, once you’re receiving the full new State Pension, almost every pound of taxable drawdown income on top of it gets taxed, typically at the 20% basic rate to start with, and potentially at 40% or 45% if your combined income climbs into higher bands.
A worked example: say you take a £10,000 taxable drawdown withdrawal in a year when you’re also receiving the full new State Pension of £12,547.60. Your combined taxable income for the year is £22,547.60. With a personal allowance of £12,570, you’d pay 20% tax on £9,977.60 of that, roughly £1,995.52 in tax, leaving you with about £8,004.48 net from that £10,000 withdrawal, on top of your State Pension.
Two other quirks catch people out. HMRC often applies an emergency tax code to your first taxable pension withdrawal, treating it as if you’ll receive that amount every month for the rest of the tax year, which can result in far too much tax being deducted upfront. <cite index=”124-1″>You reclaim this with form P55 if your pension pot is still open, or P53Z if it’s fully emptied.</cite>
Worked scenarios at different pot sizes
Numbers land better with real figures attached. Here’s how a few common pot sizes might play out, using rough, illustrative assumptions rather than a personalised projection.
£50,000 pot
At this size, drawdown is genuinely tight. Taking 25% tax-free gives you £12,500 upfront, leaving £37,500 invested. Withdrawing even a modest £2,000 a year on top of a full State Pension is a withdrawal rate of just over 5% of the remaining pot, which is on the higher end of what most safe withdrawal rate research considers sustainable over a long retirement. For pots this size, many advisers would question whether drawdown is the right structure at all, compared with using the money for a specific purpose or combining it with other income sources.
£150,000 pot
Taking the full 25% tax-free gives £37,500 upfront, leaving £112,500 invested. A 4% withdrawal rate on the remaining pot works out at £4,500 a year, rising with inflation if you’re following a fixed real-terms withdrawal approach. Combined with a full State Pension, that’s a modest but genuinely useful supplement to guaranteed income, and it’s the kind of pot size where getting the tax timing right, rather than the investment strategy, often makes the biggest practical difference to what you actually keep.
£400,000 pot
Here the tax-free lump sum reaches £100,000, comfortably under the £268,275 lump sum allowance, leaving £300,000 invested. A 4% withdrawal rate gives £12,000 a year, and at this size there’s genuinely more room to think about sequencing withdrawals across tax years, using ISA allowances alongside drawdown, and potentially delaying some withdrawals until after retiring from paid work to keep your marginal tax rate down. Larger pots also make the Money Purchase Annual Allowance (covered below) more likely to bite if you’re still working and contributing.
Sequence of returns risk: the thing calculators smooth over
This is arguably the single biggest gap in most free online drawdown calculators. A basic tool typically assumes one fixed rate of investment growth every year for the whole projection, say 5%, and shows a smooth, gently rising or falling pot value over time.
Real markets don’t behave like that, and the order in which good and bad years happen matters enormously when you’re simultaneously withdrawing money. Two people can experience the exact same average return over 20 years and end up with wildly different outcomes, purely because of when the bad years landed. Someone who hits a market downturn in their first few years of drawdown, while still withdrawing a fixed amount, can permanently damage their pot’s ability to recover, because they’re selling more units at depressed prices to generate the same income. Someone who experiences strong early returns and only sees a downturn later, after their pot has grown, tends to come through the same average return far better off.
This is called sequence of returns risk, and it’s the reason two retirees with identical starting pots, identical withdrawal rates and identical long-run average returns can end up with completely different outcomes. A calculator that only shows you a single smooth average-growth scenario isn’t lying to you exactly, but it’s showing you one of many possible paths, not necessarily a realistic or representative one. If a calculator you’re using doesn’t let you stress-test against a poor early sequence, or run a proper simulation across many historical market paths, treat its output as a rough sketch rather than a plan.
Safe withdrawal rate UK: why the 4% rule transfers badly
You’ll often see the “4% rule” quoted as the benchmark safe withdrawal rate: withdraw 4% of your pot in year one, then increase that amount each year in line with inflation, and historical research suggests your money should last roughly 30 years. It’s a genuinely useful starting benchmark, but it comes with UK-specific caveats that get lost when the rule is repeated without context.
The 4% figure originates from US research examining historical American stock and bond market returns, and UK-focused research has often pointed to a somewhat lower sustainable starting rate. <cite index=”136-1″>UK and international research often points to a lower starting range, commonly around 3.0% to 3.5%, because outcomes vary by market, inflation, fees and retirement length.</cite> <cite index=”138-1″>One tracker citing Morningstar analysis puts the UK safe withdrawal rate at around 3.7% to 3.9%, below Bengen’s original 4% figure.</cite> UK retirees also typically have a later State Pension start date relative to when many people begin drawdown, which changes how much of the early retirement years need to be funded entirely from the pension pot itself, before guaranteed income arrives to take some of the pressure off.
A few practical adjustments worth considering rather than transplanting a single fixed percentage:
- Delaying larger withdrawals until State Pension age, if your circumstances allow, reduces how many years your pot alone has to carry your full income need.
- Building in flexibility rather than a fixed rate. <cite index=”140-1″>A “guardrails” approach lets you take a higher starting income than the 4% rule, but requires you to reduce your income once your portfolio falls by more than 20% below its real starting value, which helps protect against sequence of returns risk.</cite>
- Treating the 4% rule as a starting conversation, not a target. <cite index=”137-1″>The 4% rule was specifically designed to survive the worst historical sequences of returns, including crashes at the very start of retirement, which means it’s inherently conservative and calibrated for worst-case scenarios; in most historical simulations, portfolios using a 4% withdrawal rate end up larger after 30 years than they started, because most sequences of returns weren’t worst-case.</cite>
The Money Purchase Annual Allowance: the trap most calculators ignore entirely
If you’re still working and contributing to a pension while also drawing a taxable income from another pension pot, this section matters more than almost anything else in this guide, because it’s the one thing that can cost you real money if you get it wrong, and it’s the thing most drawdown calculators don’t mention at all.
Everyone has an annual allowance for tax-relieved pension contributions. <cite index=”127-1″>The annual allowance for the 2026/27 tax year is 100% of your earnings, up to a maximum of £60,000.</cite> However, the moment you take a taxable withdrawal from a defined contribution pension, whether that’s a UFPLS payment or ongoing income from flexi-access drawdown, you trigger the Money Purchase Annual Allowance (MPAA). <cite index=”127-1″>Once you have made a withdrawal from your pension, this allowance may be replaced by the lower MPAA, which is £10,000 for the 2026/27 tax year.</cite> <cite index=”132-1″>Once the MPAA is triggered it applies for the remaining lifetime of the individual, and if you don’t use the full £10,000 limit in a given tax year, you can’t carry forward the unused amount to a later year.</cite>
What does and doesn’t trigger it:
- Taking a taxable UFPLS payment or income from flexi-access drawdown: triggers the MPAA.
- Taking only your 25% tax-free lump sum, with no taxable income taken from drawdown: does not trigger the MPAA.
- <cite index=”132-1″>Buying a non-flexible lifetime annuity generally does not trigger the MPAA, since the flexible access rules avoided by a standard annuity are what causes the trigger.</cite>
If you exceed the £10,000 MPAA limit in a given tax year after it’s been triggered, you’ll face an annual allowance tax charge on the excess, reported through Self Assessment, effectively clawing back the tax relief you would otherwise have received. This catches out people who don’t realise a small pension withdrawal has permanently reduced their contribution limit, particularly those still earning well and paying into a workplace pension. <cite index=”133-1″>Your pension provider must tell you if you’ve triggered the MPAA, sending a flexible access statement within 31 days, or 91 days if you have an overseas pension.</cite>
If you’re still working, still contributing meaningfully to a pension, and considering an early taxable withdrawal from another pot, it’s worth checking with an adviser or Pension Wise before you touch anything taxable, since the MPAA trigger is permanent and can’t be reversed once it’s happened.
FAQs
How much can I draw from my pension?
There’s no fixed legal limit on how much you can draw once you’ve accessed your pension flexibly, but how much is sustainable depends on your pot size, how long you need it to last, and your other income. A widely used starting benchmark is around 3% to 4% of your pot per year, adjusted for inflation, though UK-specific research often points toward the lower end of that range.
Does MoneySavingExpert have a pension drawdown calculator?
No dedicated drawdown modelling calculator, no. MoneySavingExpert publishes general guidance on drawdown, including how the 25% tax-free element works and tips on managing your tax bill, but for a full year-by-year projection you’ll need a tool from a pension provider or a specialist drawdown site.
Is 25% of my pension really tax-free?
Yes, up to 25% of most defined contribution pensions can be taken tax-free, capped at £268,275 under the current Lump Sum Allowance. You can take this all upfront when you first access your pension, or spread it across multiple withdrawals using an Uncrystallised Funds Pension Lump Sum, where each withdrawal is automatically 25% tax-free and 75% taxable.
What is sequence of returns risk?
It’s the risk that poor investment returns in the first few years of drawdown can permanently damage your pot’s ability to recover, even if your long-term average return ends up fine. Two retirees with identical average returns over their retirement can end up with very different outcomes purely because of when the good and bad years happened to land.
What triggers the Money Purchase Annual Allowance?
Taking any taxable income from a defined contribution pension, either through an Uncrystallised Funds Pension Lump Sum or ongoing flexi-access drawdown income, triggers the MPAA. Once triggered, your annual allowance for further pension contributions drops permanently to £10,000 a year, even if your circumstances later change.
Is the 4% rule safe for UK retirees?
It’s a reasonable starting benchmark rather than a guarantee, and UK-specific research has often suggested a somewhat lower figure, commonly in the region of 3% to 3.5%, is more appropriate given differences in UK market history, inflation patterns and State Pension timing compared with the US data the original rule was based on. Treat it as a conversation starter, not a fixed target.
Do I pay tax on my State Pension?
Yes, the State Pension counts as taxable income, though it’s paid to you gross, without tax already deducted. Because the full new State Pension is now close to using up the entire personal allowance on its own, any additional taxable income, including drawdown withdrawals, is likely to be taxed once combined with your State Pension.
Can I take my whole pension pot in one go?
Yes, this is technically possible, but for anything beyond a very small pot it’s usually a poor tax outcome, since 75% of a large single withdrawal gets added to your income in one tax year and can push you into higher tax bands. Spreading withdrawals across several tax years is almost always more tax-efficient for anyone with a meaningful pot size.
