How much income will £500k provide?

Income is not the same as withdrawals

A private withdrawal from a pension or ISA is only one part of retirement income. State Pension, DB pensions, partner earnings and other income can reduce the amount £500,000 needs to provide from year to year.

Gross income versus spending money

A gross pension withdrawal may be taxable, while ISA withdrawals are different. What matters for most households is after-tax spending in today's money. A headline income number can be misleading unless it says what tax and other income are included.

Using rules of thumb carefully

Some people look at fixed percentages such as 3%, 4% or 5% of a pot. Those can be a starting point for discussion, but they are not a guarantee. Retirement age, returns, inflation, tax and State Pension timing all affect whether a withdrawal level is sustainable.

A fictional household example

A household needing £36,000 a year of spending might not need £36,000 from the £500,000 every year. Before State Pension, private withdrawals may do more work. After State Pension starts, the required withdrawal may fall. That changing pattern is the point of using the calculator.

Common questions

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