What your result means
The headline answers one question: how long the money lasts. If your withdrawals are smaller than the growth, the pot never empties and the calculator says so rather than inventing a date. If they are larger, it tells you the year the balance hits zero.
The row that changes decisions is the final monthly withdrawal in today's money. A fixed £3,000 a month is £3,000 forever in nominal terms, but at 3% inflation it buys what £895 buys today by year forty. The pot lasting is not the same as the income lasting, and a flat SWP quietly fails long before it runs out.
Because only the growth portion of each withdrawal is a taxable gain, the tax on withdrawals figure is much smaller than a naive calculation suggests — you are mostly handing yourself back your own capital, which is not income and is not taxed.
A bad first five years can cost you twenty-five years of income
While you are investing, the order of good and bad years barely matters — you end up with roughly the average either way. The moment you start withdrawing, order becomes everything. Selling units in a falling market means selling more of them to raise the same cash, and those units are never there for the recovery.
This is sequence-of-returns risk, and it is the single biggest reason retirement plans fail despite hitting their average return. Switch on the stress test in the advanced options to see it: the same plan, the same long-run average, five bad years at the start.
How it works
Each month your withdrawal is taken from the balance first, and whatever remains grows for the rest of the month. Charges are then deducted. The loop continues until the balance reaches zero or the period you set expires.
For tax, each withdrawal is split between returned capital and realised gain in proportion to how much of the current balance is growth — the standard part-disposal approach. Only the gain portion is taxed, and it is assessed once a year against whatever allowance your chosen preset provides.
With no withdrawal period set, the simulation runs up to fifty years. If the pot is still intact at that point the tool reports that it does not run out rather than quoting a spuriously precise date decades away.
How to use this calculator
- Enter the pot you are starting with.
- Enter the amount you want to withdraw each month.
- Set the return you expect the remaining balance to earn.
- Open Advanced options to add inflation, charges, tax, and a fixed withdrawal period if you have one.
- Turn on the five-year stress test before you trust the answer.
Formula
Bt = balance in month t, W = monthly withdrawal, i = net monthly return after charges. There is no closed form for the number of months when withdrawals step up, which is why this runs as a month-by-month simulation.
Worked example
A £500,000 pot, withdrawing £3,000 a month, earning 7% with 3% inflation:
Total withdrawn £1,471,510
Final £3,000 is worth £895 in today's money
With five bad years first (−2%):
Money lasts 16 years 1 month
Total withdrawn £577,715
Same pot, same £3,000, same 7% long-run return — and the plan goes from lasting forty-one years to sixteen. Nothing changed except when the bad years happened. That is why a headline "your money lasts 40 years" should never be read on its own, and why holding two or three years of withdrawals in cash is standard advice for anyone drawing an income.
Frequently asked questions
What is a safe withdrawal rate?＋
The widely cited figure is around 4% of the starting pot a year, rising with inflation, based on US market history over thirty-year retirements. It is a rule of thumb rather than a law — it assumes a particular asset mix, a thirty-year horizon and a specific market record. Run your own numbers, then run them again with the stress test on.
Is an SWP taxed as income?＋
No. Each withdrawal is part return of your own capital and part realised gain, and only the gain is taxable — which is why an SWP is usually far more tax-efficient than an equivalent income payment. The UK preset applies the £3,000 annual exempt amount and your CGT rate; the India preset applies 12.5% above ₹1.25 lakh on equity funds.
Should I increase my withdrawal each year?＋
If you want the income to keep its purchasing power, yes — and you should see what that costs before committing. Switch to step-up SWP mode: on most plans, indexing withdrawals to inflation shortens the pot's life by roughly a quarter.
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Assumptions & limitations
Withdrawal projections are more fragile than investment ones. Keep these in mind:
- Returns are assumed constant every year. Real markets are not — they deliver the average through a sequence of good and bad years, and the order those arrive in changes the outcome.
- Growth is compounded monthly from the annual rate you set, so 10% a year becomes 0.797% a month rather than a flat 0.833%.
- Fund charges are deducted monthly from the balance. Platform fees, trading costs and bid-offer spreads are not modelled separately — fold them into the charge figure if you want the full picture.
- Inflation is applied at a single constant rate to produce the "today's money" figures. Your personal inflation rate depends on what you actually buy.
- Nothing here is financial advice, and no projection is a promise. Use it to compare scenarios against each other, not to predict a number.
- Unless the stress test is switched on, returns are constant — which understates the risk of running out, because real withdrawal outcomes depend heavily on the order of returns.
- The cost basis of a pot you enter directly is assumed to equal the pot itself, so the tax figure is conservative. If much of your balance is untaxed gain, your real tax bill will be higher.