How Long Will My Pension Last in Retirement?

Why is there no single answer?

A pension in drawdown is not a fixed pot that depletes at a predictable rate. It is an invested fund that changes in value, from which withdrawals are taken at varying times and amounts.

The fund can grow. It can fall. It can recover. It can be drawn down faster than expected. It can be supplemented by other income.

MoneyHelper confirms that with drawdown, the pension fund remains invested and can go up or down in value, and that there is a risk of running out of money.

That risk is real — but it is not fixed. It can be managed, reduced and planned for.

The four main levers

Understanding what drives pension sustainability helps you see which levers you can actually influence.

Withdrawal rate: the biggest lever

The withdrawal rate is the percentage of the fund taken as income each year. It is the single most controllable factor in pension sustainability.

A fund of £300,000 with annual withdrawals of £15,000 has a withdrawal rate of 5%. The same fund with withdrawals of £9,000 has a withdrawal rate of 3%.

Those two percentage points can make a very significant difference to how long the fund lasts — particularly when investment returns are modest or negative.

The withdrawal rate also changes over time as the fund value changes. A fund that falls in value means the same pound withdrawal now represents a higher percentage of the remaining pot.

Steve's observation

I find it helpful to think about withdrawal rate not as a fixed number but as a relationship.

The relationship between:

what you need to spend

and:

what the fund can sustainably provide.

When those two things are well-matched, the plan tends to hold together.

When they drift apart — because spending increases, or the fund falls, or both — that's when the plan needs attention.

What is a sustainable withdrawal rate?

There is no universally agreed figure. Research has suggested rates in the region of 3–4% as starting points for discussion in certain scenarios, but these are not guarantees and they depend heavily on assumptions about investment returns, inflation and time horizon.

A rate that appears sustainable at the start of retirement may not remain so if:

• investment returns are persistently lower than assumed;
• inflation erodes the real value of the fund faster than expected;
• withdrawals increase over time;
• the retirement lasts significantly longer than planned.

Sustainability is not a one-time calculation. It is something that needs to be reviewed as circumstances change.

Investment returns in retirement

In drawdown, the pension fund remains invested. That means it can grow — but it can also fall.

The investment strategy chosen affects both the potential for growth and the level of volatility experienced. A more cautious strategy may produce lower returns but with less dramatic short-term falls. A more growth-oriented strategy may produce higher long-term returns but with greater short-term volatility.

Neither approach is automatically right. The appropriate strategy depends on how much income is needed, how much of the fund can absorb short-term falls, and how long the money needs to last.

We've covered drawdown in detail in:

What Is Pension Drawdown and How Does It Work?

Charges and their compounding effect

Pension and investment charges reduce the net return achieved. Over a long retirement, even modest annual charges compound into a meaningful reduction in fund value.

For example, a difference of 0.5% per year in total charges on a £300,000 fund is £1,500 in the first year alone. Over 20 years, with the compounding effect, the difference in fund value can be substantially larger.

Charges are not always visible in the same way as withdrawals, which is why they can be underestimated. But they are real and they affect sustainability.

Longevity: the unknown variable

How long you live is the one variable that cannot be known in advance. It is also one of the most important.

A pension that looks sustainable for a 20-year retirement may not be sufficient for a 30-year retirement. The difference between retiring at 65 and living to 85 versus living to 95 is significant.

ONS data shows that life expectancy at 65 in the UK has been increasing over time, and many people underestimate how long they may live in retirement.

Planning for a longer retirement than you expect is generally more prudent than planning for an average one. The cost of running out of money is much higher than the cost of having money left over.

Sequencing risk: why early falls matter more

Sequencing risk — sometimes called sequence-of-returns risk — is the risk that poor investment returns early in retirement have a disproportionate impact on how long the fund lasts.

Here is why it matters.

If a fund falls significantly in the first few years of retirement while withdrawals continue at the same rate, the fund is depleted from a lower base. Even if markets subsequently recover, the fund has fewer units or assets to benefit from that recovery.

The same average return over a 20-year period can produce very different outcomes depending on whether the good years come early or late.

This is one of the key reasons why the investment strategy and withdrawal approach in the early years of retirement can be particularly important.

We cover what happens when investments fall in more detail in the next guide:

What Happens to My Retirement Income if Investments Fall?

A simple illustration

Consider two people, both with a £250,000 drawdown fund at age 65.

Person A withdraws £10,000 a year. Person B withdraws £18,000 a year.

Assuming the same modest investment return and the same charges, Person A's fund lasts significantly longer than Person B's — potentially by a decade or more.

Now add sequencing risk: if both experience a 25% fall in the first three years, Person B's fund is under much greater pressure than Person A's, because the same fall removes a larger proportion of the remaining fund relative to the ongoing withdrawal need.

This illustration is not a forecast or recommendation. It is simply showing that withdrawal rate and sequencing interact — and that the interaction matters.

What if I also have guaranteed income?

Guaranteed income — from State Pension, defined benefit pensions or annuities — can significantly reduce the pressure on a drawdown fund.

If guaranteed income covers essential expenditure, the drawdown fund may only need to provide flexible or discretionary spending. That lower withdrawal rate can substantially extend how long the fund lasts.

This is one reason why the question "how long will my pension last?" cannot be answered without knowing the full income picture.

A £200,000 drawdown fund looks very different when it needs to provide £20,000 a year versus when it only needs to provide £5,000 a year on top of other guaranteed income.

Can I adjust as I go?

Yes — and this is one of the genuine advantages of drawdown over a fixed annuity.

If the fund falls significantly, withdrawals can be reduced. If circumstances change — health, expenditure needs, other income — the approach can be adapted.

But flexibility only helps if it is actually used. A plan that is never reviewed, and where withdrawals never change regardless of what happens to the fund, does not benefit from the flexibility drawdown provides.

Regular review is not optional in drawdown. It is part of how the plan works.

What about inflation?

Inflation is one of the less visible but most persistent risks in retirement income planning.

If withdrawals stay flat in cash terms but prices rise, the real value of each pound withdrawn falls over time. To maintain the same standard of living, withdrawals may need to increase — which means the fund is drawn down faster.

A retirement that begins at 65 and lasts to 90 spans 25 years. Even modest inflation compounds significantly over that period.

Investment returns that keep pace with or exceed inflation can help offset this. But there is no guarantee that they will, particularly in the short term.

What should I do next?

To assess how long your pension might last, establish:

• The current value of your drawdown fund;
• How much you need to withdraw each year — and what that represents as a percentage of the fund;
• How much guaranteed income you have from other sources;
• How long you need the fund to last — and whether you are planning for average or possible longevity;
• What investment strategy the fund is following and whether it is appropriate for your withdrawal needs;
• What charges are being deducted and how they affect net returns;
• Whether the plan is being reviewed regularly.

Before making significant decisions about drawdown withdrawals, establish your full income picture including guaranteed income sources, your expected withdrawal rate, and how long the fund may need to last. If several pensions, a mix of income sources or significant fund values are involved, regulated financial advice can help assess sustainability and build a plan that can adapt over time.

The Open Door Wealth view

The question "how long will my pension last?" is one of the most common questions we hear.

And the honest answer is: it depends.

But "it depends" is not a reason to avoid the question. It is a reason to understand what it depends on.

Withdrawal rate. Investment returns. Charges. Longevity. Guaranteed income. Flexibility to adapt.

These are the levers. Some you can control. Some you cannot. But you can plan around all of them.

The goal is not to find a number that tells you everything will be fine. The goal is to build a plan that can hold together across a range of outcomes — and that gets reviewed regularly enough to catch problems before they become crises.

That is what good retirement income planning looks like.