Retirement Calculator

About the Retirement Calculator

Most retirement calculators model one half of the problem: what the pot grows to. The half that decides whether you can retire is the other one — whether the pot survives being drawn down.

This calculator does both, and the reason it matters is a detail most projections quietly get wrong.

You want the income in today's money. The pot has to pay it in future money.

Ask for £30,000 a year and you mean £30,000 of what it buys now. After 27 years of 3% inflation, that is £66,638.67 of actual cash in your first year of retirement — and every year after that it rises again. A model that holds the withdrawal flat at £30,000 is assuming you accept a falling standard of living every single year, and it will tell you the pot lasts far longer than it does.

How to Use the Retirement Calculator

Enter your age now, when you want to retire, and the age to plan to. Plan beyond your life expectancy, not to it — roughly half of people live longer than the average, and running out at 90 is not fixed by the fact that you were not supposed to reach it.

Enter what you have saved so far and are saving each month.

Enter the income you want in today's money. The calculator converts it.

The return in retirement is usually lower than the one while saving, because most portfolios shift towards safer assets around drawdown.

Step-by-Step Example

Age 40, retiring at 67, planning to 95. £80,000 saved, £600 a month, wanting £30,000 a year. 6% while saving, 4% after, 3% inflation.

  Pot at 67:                 886,546.87
  Of which your own money:   274,400.00

  30,000 today, at 67:        66,638.67 a year
  First-year withdrawal rate:      7.52%

  The money runs out at:              82

Nearly £900,000, and it fails thirteen years early.

That is the gap this calculator exists to show. £886,546 looks like plenty. At a 7.52% withdrawal rate rising with inflation, it is not, and a projection that stopped at the pot figure would have said the plan was fine.

The most it actually sustains to 95 is £16,838.27 a year in today's money — a little over half what was wanted.

What Actually Fixes a Shortfall

Three levers, and they are not equal:

Notice the two middle rows. A 50% increase in monthly saving and three extra working years land on exactly the same age.

That is the case for retiring later. Not that it beats saving more outright — here it matched a large increase — but that it achieves the same thing with a much smaller change, because it works on both sides at once: it adds years of contributions and removes years of withdrawals.

Spending less in retirement only does the second. Saving more only does the first.

The 4% Rule

The calculator reports it, because people ask, and labels it as what it is.

  4% of 886,546.87  =  35,461.87 a year

The rule came from a specific study of a specific market history. It was never meant to survive being quoted as a law, and it does not travel well to different return assumptions, different inflation, or a retirement planned to 95 rather than 30 years.

The sustainable figure the calculator computes is specific to your inputs and is the better guide. In the example it is well below 4%, because the planned horizon is long and the assumed return in retirement is modest.

What This Cannot Tell You

One thing, and it is the most important thing about drawdown: sequence risk.

Markets do not deliver an average in order. A plan that survives on a smooth 4% can still fail on a real sequence that delivers −15%, −8%, +22%, and so on — because in the bad years the withdrawals are coming out of a falling balance, which locks the losses in permanently.

The same decade of poor returns does far more damage at the start of retirement than at the end. That asymmetry is not visible in any single-average projection, including this one.

So treat a surplus here as a buffer, not as spare money. A plan that only just survives on average assumptions is a plan that fails about half the time.

Understanding Your Result

Does it last? is the answer: an age, or confirmation it reaches your horizon.

Pot at retirement shows the total and how much of it was your own money.

What the income costs by then is the inflation conversion — usually the most surprising line.

What it can sustain is the honest maximum, in today's money so it is comparable to what you asked for.

Worth knowing names the levers, or the sequence-risk caveat.

When Should You Use This Calculator?

Whenever the pot figure alone looks reassuring. That is exactly when the drawdown half is worth running.

To test a retirement date. The table above is the single most useful thing here.

To set a realistic income target. Working backwards from what the pot sustains is often more honest than working forwards from what you want.

After any change. A pay rise, an inheritance, a career break — all move it.

Common Mistakes

Holding the withdrawal flat in cash. The single biggest source of over-optimistic retirement projections.

Planning to life expectancy. Half of people exceed it. Plan to 95 or beyond.

Treating the 4% rule as a law. It is a finding from one market's history.

Using the same return before and after retirement. Most portfolios de-risk, and the return in drawdown matters far more per point.

Ignoring the state pension or other guaranteed income. Subtract it from the income you need before entering a figure here, or you will over-save.

Reading a surviving plan as a safe one. Average returns and real sequences are different things.

Forgetting tax on withdrawals. Depending on the account, what comes out may be taxed, which means drawing more than the figure you need to spend.

Every figure here is an estimate for planning. Retirement decisions usually warrant regulated advice, and this is not it.