How the calculator works (methodology)

Last updated 2 November 2026.

Will My Pension Last? gives general information, not personal financial advice or a recommendation. This page explains how the projections are worked out, what they assume and what they leave out. Assumptions are as at 1 November 2026. Every figure on this page comes from the same settings the calculator uses.

What the calculator does

It takes your answers (ages, pension pots, savings, other income and the income you would like) and projects your household's money one tax year at a time, from the 2026-27 tax year to a "plan-to" age late in life. It works for one person or a couple.

Rather than one straight-line forecast, it runs 1,000 possible futures for investment returns and inflation. Some are good, some are poor. The results show what happens in a typical future, in a poor one, and how often your money lasts.

All figures are shown in today's money, so £1,000 in 20 years' time means what £1,000 buys today. Inside, the calculator works in future pounds, so limits that are fixed in law stay fixed.

Ages and dates. Ages are the age you reach during each tax year. If you give only your age, your birthday is taken as 1 January; a date of birth gives exact dates. You stop work on your stop-work birthday: in that tax year, spending from savings and pensions starts on that date and any pay stops then, just as the State Pension starts on its own date. If your balances are for a date after 6 April, you can say so, and the first year then covers only the rest of the tax year. Tax for that part-year is worked out as if there were no income earlier in the tax year, so it may be lower than you will actually pay.

What it doesn't do

It does not tell you what to do. It shows scenarios and trade-offs, not recommendations about retirement age, investment risk or which pots to spend first.

It does not model: inheritance tax (including the planned change for pensions from April 2027), annuity prices (you enter a quotation you have), transfers out of final salary schemes or a scheme's own rules for leaving early, long-term care costs beyond a simple amount, protected pension ages, the annual allowance tax charge, partial or inherited State Pension records, the older State Pension rules (State Pension age before 6 April 2016), the lump sum offered for deferred State Pension, income, tax and payments earlier in the current tax year, savings goals, or tax reliefs that extend your tax bands (such as Gift Aid).

Investment growth

Growth rates follow the Financial Reporting Council's AS TM1 standard, which pension providers use for the yearly illustrations they send you. We credit the FRC as the source of these rates.

Investment mix Growth a year Ups and downs a year
Cash 3% 1%
Cautious 2% 4%
Balanced 4% 9%
Growth 6% 13%
Adventurous 7% 17%
  • Growth is the typical yearly growth before charges. Ups and downs is how much a single year's return varies around it (volatility).
  • Charges: each pot's yearly charge is taken off at the start of each year, as AS TM1 does.
  • Each pot its own mix: every pension, ISA and investment account can have its own mix.
  • Investments over time: each person can keep the same mix throughout, move step by step to Cautious over the 10 years before stopping work, or stay as they are until 75 and then move to Cautious. This applies to all their pensions, ISAs and investments, not cash. These are patterns people use, not recommendations.
  • Cash: 3% a year, set from Bank of England Bank Rate and ONS inflation from 1997 to 2025 (Bank Rate averaged a little above inflation).
  • Volatility: our own assumptions, set so each mix sits in the right AS TM1 group. Returns follow a log-normal pattern centred on the AS TM1 rate.
  • How things move together (correlation): shares and bonds +0.1, inflation and shares −0.1, inflation and bonds 0 (on a scale from −1 to 1). These are our judgement: there is no free public data series to set them from, and we do not use licensed market data.
  • Your own rates: you can set your own average inflation and your own growth for pensions, ISAs, other investments and cash. Growth rates are nominal (before inflation) and before charges, and replace the mix's typical rate for those pots only; the mix's ups and downs still apply around them, on the same futures. Changing inflation leaves growth rates as they are. These are your assumptions, not our forecasts.
  • Dividends: shares held outside ISAs and pensions are assumed to pay 2% a year in dividends, taxed each year and reinvested. This is our assumption.

The futures are created once when you open the page. When you move a slider, the same futures are reused, so the result changes because your plan changed, not because the luck changed. While you drag a slider, the result briefly uses 200 of the futures so it keeps up, then all 1,000 once you let go.

Inflation

Inflation averages 2.5% a year (the AS TM1 figure) and varies by 1.86% a year in each future, set from ONS consumer price inflation (CPI) from 1997 to 2025. If you set your own average, every future moves by the same amount, so comparisons are like for like. Showing figures in today's money or future pounds never changes the plan itself.

Allowances and limits over time

  • Rising after a freeze: the Personal Allowance, income tax bands, National Insurance thresholds and the £5,000 starting rate for savings are frozen until 5 April 2031 (current law), then assumed to rise with prices each year.
  • Never rising: these have no automatic increase in law, so they stay at today's cash amount and are worth less over time in today's money:
    • the £268,275 cap on tax-free cash
    • the Personal Savings Allowance (£1,000 for basic-rate taxpayers, £500 for higher-rate)
    • the £500 dividend allowance
    • the £3,000 Capital Gains Tax exempt amount
    • the £1,000 property allowance
    • the £60,000 annual allowance for pension payments, which is lower for very high incomes (£10,000 at the lowest)
    • the £10,000 money purchase annual allowance once you start taking taxable pension income
    • the £20,000 ISA allowance (frozen until 5 April 2031; we assume it stays at that amount)
  • State Pension: rises with average earnings unless you choose otherwise. Earnings are assumed to grow 1% a year faster than prices. You can choose the "triple lock" instead (the highest of price inflation, earnings growth and 2.5%, every year for life: current policy, but not guaranteed) or prices only (the same buying power every year). Over a long retirement this choice can change the result a lot.
  • Payments in: regular payments into pensions and ISAs rise 2.5% a year unless you change it, which keeps them roughly level in today's money.

Because the State Pension rises and the Personal Allowance is frozen, a full State Pension can go above the Personal Allowance, so some tax is due on it even with no other income.

Tax

The calculator works out income tax each year for England, Wales, Northern Ireland or Scotland, using the rules for each tax year we have published figures for. It includes:

  • the Personal Allowance (£12,570) and its reduction for incomes over £100,000
  • Scottish income tax bands for Scottish taxpayers
  • tax on savings interest, dividends and rental profit, including the separate rates announced for 2027/28 (announced in the Budget, not yet law)
  • interest on cash savings, including tax-free cash held as cash, taxed each year
  • Capital Gains Tax on investments outside ISAs and pensions
  • National Insurance on earnings before State Pension age
  • the earliest age you can take a private pension (55, rising to 57 from 6 April 2028)
  • State Pension age worked out from your date of birth using the GOV.UK timetable
  • State Pension-only incomes: the government has announced that people whose only income is the State Pension will not pay income tax from the 2027/28 to the 2029/30 tax years. We apply this when the State Pension is someone's only taxable income (a little savings interest within the savings allowance aside). It is not yet law. Nothing has been announced for later years, so after 2029/30 we assume tax is due as normal; the timeline marks those years with an asterisk.

Tax rules are simplified in places and can change. Your own tax depends on your circumstances.

Tax-free cash

You can take a quarter of your pension pots tax-free, up to the £268,275 limit. The calculator offers three ways:

  • All at once when you retire: one lump sum at your retirement age. You can say how much of it you spend straight away (for example on a mortgage or a car). The rest is kept as cash or in an ISA and is used for your income before your other savings. Any other big expense you add also comes out of it first.

  • Some now, the rest bit by bit: a lump sum you choose, taken at retirement and spent. To take it, four times that amount is moved into drawdown: a quarter comes out tax-free and the other three quarters stay invested and are taxed when drawn. The rest of the pot is untouched and works as below.

  • Bit by bit as you draw: no lump sum; each amount you take from your pots is a quarter tax-free and three quarters taxed.

  • Already taken: for pensions already in drawdown. You can say how much of the pots is already in drawdown (all, if left blank) and how much tax-free cash has been taken so far. Money in drawdown is taxed in full when drawn. Any part not yet in drawdown still gives a quarter tax-free, within what is left of the £268,275 limit. If you don't know how much has been taken, the form says the result may be too generous rather than assuming a figure.

For a couple, each of you chooses separately. Each lump sum comes from that person's own pots, within their own limit, and is paid when they stop work. The limit and any tax-free cash already taken belong to the person, not to each pot.

Pots with different histories

You can add pension pots beyond each person's main one, each marked as untouched, in drawdown, or partly in drawdown. Each is projected separately with its own history; no new payments go into them. Two pots in the same state can simply be added together.

Taking money out of a pension

You can set a yearly amount to take from a pension from now on, either the amount leaving the pot (before tax) or the amount you want to receive (after tax). For an after-tax amount, the calculator works out how much must come out to leave that much once income tax is paid, taking account of the person's other income that year. If the pot runs short, the plan shows it rather than counting money that isn't there.

The yearly breakdown shows the lump sum apart from your own savings, so you can see when it is used up.

Which money is spent first

By default, the calculator draws money in an order that tends to keep tax down. It uses pension income to fill the Personal Allowance, then cash savings above any emergency buffer, then investments up to the Capital Gains Tax exempt amount, then ISAs, then other investments, then more pension income. For couples, pension income is shared between partners to keep their tax rates level.

You can choose a different order for your plan: pensions first, savings first, or your own order of cash, ISAs, investments and pensions. The What if page shows the orders side by side, using the same futures, and you can sort them by tax paid, chance of lasting or money left. This is a comparison, not a recommendation.

Annuities

If you have an annuity quotation, you can enter it: the pot it would be bought from, the age, the price, the yearly income, how it rises (not at all, with prices, or by a set percentage), whether it continues for a partner and any guarantee period. The price comes out of the pot once, and the income is paid from that year and taxed as pension income. If the pot holds less than the price by then, only that share is bought and the result says so. Guarantee periods are recorded but not modelled. We don't provide quotes or say whether an annuity suits you; Your scenarios can show the plan with and without one.

Final salary pensions

You enter the yearly amount, the age it is paid from and how it rises. Scheme statements often assume you keep working until a set age: if yours does and your plan stops work earlier, the result warns that the figure is likely too high and suggests asking the scheme for a quotation for leaving earlier. You can keep several quotations, each with where it came from and its conditions, and choose which one the plan uses. The calculator never works out a scheme pension itself.

Claiming the State Pension later

You can choose to claim your State Pension later than your State Pension age. Under the new State Pension rules on GOV.UK, it then rises by 1% for every 9 weeks you wait (worked out by the week, so about 5.8% for a year), as long as you wait at least 9 weeks, and the extra rises with prices each year. Nothing is paid for the weeks you wait. The form shows what is given up, the extra a week and roughly how many years of higher payments it takes to make it up, in today's money and before tax. It does not say whether waiting is better.

Rental property and mortgages

For a property you let, you can enter the rent, running costs, mortgage interest, total mortgage payments (interest and capital together) and when the mortgage is paid off. Rent and running costs rise with prices; mortgage payments stay the same in pounds. Tax is on the profit (rent less running costs), with basic-rate relief on the interest; the money you can spend is what is left after all mortgage payments. A property's value is never treated as money to spend unless you add a sale as a one-off.

Before your pensions are all paying

When work stops before pensions can be taken, or before the State Pension starts, the estimate page shows how those years are paid for: the money you can use, the money locked in pensions until they can be taken (never counted before then), any reserve kept back, and for each period how much comes from ongoing income, from savings and how much falls short. It also says when those early years, rather than your total savings, set the headline figure.

Emergency reserve

The "keep at least" cash is protected from ordinary spending, even if that means the plan falls short. A one-off expense you take from cash can use it, and the result says when that happens.

Couples and the death of a partner

Each partner has their own tax allowances, pension rules and State Pension. Spending is shared and follows the older partner's age. When the first of you stops work, half the spending is taken from savings and pensions, with the other partner's earnings counted as income; the full amount is taken once you have both stopped.

Each partner can pay income tax in a different part of the UK. Savings and investments are held by whichever of you owns them, so the interest, dividends and gains are taxed as theirs. Cash you hold jointly is counted once and split between you by the share you give (half each if you don't say); the split changes only whose tax allowances the interest uses, not what you have.

An optional scenario shows what could happen if one partner dies first: their State Pension and earnings stop, a final salary pension pays the survivor's share you set (half unless you change it), pots pass to the survivor, and spending falls by a quarter. This is a scenario, not a forecast.

Care costs

You can add a yearly care cost on top of your spending, from an age you choose. It counts once either of you has retired, keeps its value in today's money, and stops if the person it is for dies. It is a simple amount, not a model of care fees or funding rules.

Pension payment limits

If more than the annual allowance goes into someone's pensions in a year, we show a warning. The allowance is £60,000, tapered for incomes over £200,000 (with pension payments from an employer counted on top) down to £10,000, or £10,000 once taxable pension income has been taken. We keep the payments as entered and do not work out the tax charge or any unused allowance carried forward from earlier years.

Stress scenarios

The What if page can apply a share market crash, a period of high inflation, or shares and bonds falling together, to every future. These show how sensitive the plan is to bad events.

Trying changes

The "What if" page has sliders for retirement age, spending, contributions, investment mix, tax-free cash, charges and how long to plan for. Your plan stays as it is until you choose to keep the changes, and the page shows your plan and the changed version side by side, using the same futures.

Changes over time: you can set years where pension payments, spending or pay differ from usual, such as a quieter year of saving or part-time work. Outside those years the usual figures carry on.

Your scenarios: you can save the plan under a name, change it and save another, then compare them. Opening a scenario restores exactly what was saved. Comparisons use the same futures, test every scenario at the same spending (the first scenario's estimate) and list which answers differ. Scenarios are kept in your downloaded plan file, with the date of the assumptions they were saved under.

How long the plan runs

By default, the projection runs to the age at which there is about a 1 in 4 chance that you (or, for a couple, at least one of you) are still alive. This comes from the Office for National Statistics national life tables for 2022 to 2024, by single year of age. Life tables describe today's death rates, so they tend to understate how long people will actually live. You can change the plan-to age yourself.

Reading the results

  • Chance your money lasts: the share of the 1,000 futures in which your take-home income meets your target every year up to the plan-to age.
  • Typical and poor-markets futures: the futures halfway down and one tenth of the way up when ranked from worst to best, so their yearly figures add up.
  • "You could have around": the highest take-home income that lasts in the chosen share of futures (8 in 10 by default), the same every year (in today's money, easing off later if you choose).
  • A second figure from a later age: if the years before all your pensions are paying set that figure, the page also shows how much could be spent from the age after them, with those earlier years kept at the first figure, at the same chance of lasting.
  • Annuity income is shown on its own line in each stage, apart from final salary pensions.
  • Stages: each stage of your retirement shows its first year: the money coming in before tax by source, the tax paid, and what is left to spend.
  • How your savings change each year: for all pots together in the typical future, the start, money paid in, money taken out, growth, charges, the effect of that year's inflation, and the end. Moving money between your own pots shows as out of one and into another, not as new money.
  • State Pension figure: if you haven't entered a forecast, the full new State Pension is used and the result says so. "I won't get one" is treated as nothing, which is different from not knowing.

Sources and credits

Contains public sector information licensed under the Open Government Licence v3.0.