Countdown to drawing your pension

There are many ways to turn your pension savings into an income. What you decide will shape your lifestyle - so you’ll want the best help. Our experts guide you through each step, with help from people who’ve been through it.

Plan ahead to maximise your pension

Planning your pension income well ahead can mean the difference between living on £15,000 a year, and living on £30,000 or more when you retire.

Pension calculator

Our pension calculator provides an estimate of how much your pension fund could be at retirement and what retirement income you might expect taking an annuity or drawdown.

What is income drawdown?

Allows you to keep your pension invested in the stock market and to take or 'draw down' a regular income from it.

What is an annuity?

An insurance policy that guarantees an income for life in return for the pension fund built up over your working life.

Start to calculate my pension

How much can I get? Use our pension calculator to find out


Add together the figures from the annual statement you get from your pension provider. If you don't have this, you can call the provider and ask for the figures.


Your estimated total pension fund at retirement age:


Retirement income options:


Yearly income in advance, based on 6% investment growth over 20 years:



Yearly non-guaranteed annuity that increases with RPI:


* This figure is based on the following assumptions:


Fund performance






Yearly increase in payment contribution


Fluctuations in fund performance can happen - we give examples below of how lower fund performance will impact the size of your pension pot.

Estimated total pension fund at retirement

Fund performance





Start again

The figures should be considered as illustrative only, any changes to the assumptions used in the calculator could generate a smaller or larger pension fund. Nothing in this calculator constitutes pensions advice by Which? You should consult a qualified financial adviser who can consider individual circumstances if pensions advice is required. Which? Limited does not accept any liability for any loss or damage suffered as a consequence of relying on any information contained in this calculator.

We have included details of the assumptions used in the calculation above. The calculator uses current tax and pension legislation, taking into account lower rate income tax relief of 20%.

Want to talk to an expert?

Members can call our Money Helpline and speak to Which? financial experts for one-to-one guidance.

Try Which? today

Video: pension changes explained

In our short video, the editor of Which? Money explains the five things you need to know about the 2015 pension changes.

'Having been told I would be stuck with a pension annuity paying me just over £100 per annum, they enabled me to negotiate a flexible drawdown so I can use my money in the way that best suits me. Had it not been for them I would have been palmed off so thank you, thank you, thank you.' - Pippa H used the Which? Money Helpline, which is free to all Which? members. Sign up now

What's normal income in retirement?

£34,000 a year is the most recent government figure for the income of the average pensioner couple. But how much money makes for a comfortable retirement? Here's the percentage of pensioners who feel happy with their life, split by household income.

Up to £15,000 per yearFrom £15,001 to £20,000From £20,001 to £25,000From £25,001 to £30,000From £30,001 to £40,000

Government data for pensioner couples aged below 75, 2011. Survey data from Nest, 2014

How much do I need to save in my pension?

In your 20s

The earlier you start, the more pension you'll get - read more

In your 30s

Any saving is worthwhile, even if family finances are squeezed - read more

In your 40s

Assess the size of your pot - read more

In your 50s

Increase contributions if your earnings allow it - read more

In your 60s

See our section on the countdown to retirement - read more


Jargon buster


State pension

The pension paid by the government to individuals when they reach state pension age. In 2015, this age is 65 for men and 62 for women, but is being equalised at 65 before increasing to 67 across the board by 2028.


Defined contribution pension

Also known as a 'money purchase' scheme. This is the most common type of pension. Your final pension fund is based on a variety of factors, including the contributions you and your employer made, which were then invested, charges deducted and investment returns.


Defined benefit pension

Also known as a 'final salary' scheme. Your final pension is linked to salary – either final salary or earnings averaged over the period of membership.



An insurance policy that guarantees an income for life in return for the pension fund you've built up over your working life.


Income drawdown

Instead of buying an annuity you can leave your pension pot invested in the stock market via income drawdown, and take – or 'draw down' - a regular income from it.



System of pension scheme provision for all employers that means any employees earning at least £10,000 must be enrolled in a pension scheme. Employees do then have the right to opt out.

How much do I need to save?

How much do I need to save, at current prices, each month to get £15,000 per year in retirement (including the state pension)? Click here for more information.

Starting at 25Starting at 35Starting at 45Starting at 55

Step-by-step guide to retirement


Get a state pension forecast


Talk to your pension company


Consider getting some advice


Think about taking a tax-free lump sum


Stop working/work part-time


Use 'Pension Wise'


Make your decision on your pension fund


Paying tax in retirement


Consider deferring the state pension


Receive the state pension

1: Get a state pension forecast

When? 12 months before retirement

It’s a good idea to get a state pension forecast from around a year before you intend to retire. The Pension Service should contact you four months before you retire if you need to claim your state pension. You can contact it on 0800 731 7898.

For more, see our guide to the state pension.

2: Talk to your pension company

When? 6 months before retirement

Your pension companies should contact you six months before you retire, outlining your options and again six weeks before. If you haven’t heard from the company, give it a ring to find out what your final pension will be and how it will be paid. If you’re enrolled in a workplace pension scheme, contact the pension trustee to find out how much you’ll get.

For more, see our guide to company pensions.

3: Consider getting some advice

When? Around 3 months before retirement

If you've got particularly complex needs in retirement, have built up multiple pension pots, or need help with investing any of your spare cash, it is well worth seeking financial advice. The pension changes have arguably made your choices even more complex.

For more, see our guide to financial advisers.

4: Think about taking a tax-free lump sum

When? Around 3 months before retirement

When you take your personal or workplace pension, you’ll probably get the option to take part of it as a tax-free lump sum. The maximum is 25% either of the total value of the pension pot.

Before you take a lump sum, consider the impact it will have on your pension pot – you’ll be left with less money with which to buy an annuity or to use for income drawdown.

For more, see our guide to taking a lump sum.

5: Stop working/work part-time

When? At retirement

You may not want to stop working completely when you retire. The number of people who work beyond state pension age, either part-time or full-time, is around 1.4 million. Some keep working because they need the money, others because they enjoy work and don’t want to stop abruptly.

For more, see our guide to carrying on working.

6: Use 'Pension Wise'

When? At retirement

From April 2015, people about to retire will get free, impartial guidance on what to do with the money in their defined contribution (DC) schemes (where they’ve built up a pot through their working life). The service is known as ‘Pension Wise’ and is being delivered by independent organisations including The Pensions Advisory Service and Citizens Advice.

For more, see our guide to Pension Wise.

7: Make your decision on your pension fund

When? At retirement (or you could defer a while)

You’ll need to make a final decision about how you want to take your pension income. The new pension freedoms will mean that you have three main options, or a mixture of the three – arrange an annuity, opt for income drawdown or take the lot but potentially pay 40% tax on some of it.

For more, see our guide to your pension options.

8: Paying tax in retirement

When? In the first year after retirement

Contrary to what people may think, state pensions are not tax-free, but the money you receive is paid 'gross', which means you get it without any tax being deducted. Income you receive from private pensions (either directly from an employer's pension scheme or from annuities bought with your pension funds) is paid with tax already deducted via 'pay as you earn'

For more, see our guide to tax in retirement.

9: Consider deferring the state pension

When? At or after state retirement age

If you want to try to boost your weekly state pension by delaying when you receive it, you'll have to put off claiming it for at least five weeks. For every five weeks you defer, you'll get a pension increase of 1%. This works out at 10.4% for every full year.

For people qualifying for the state pension after April 2016, the rate of annual increase will fall from 10.4% to 5.8%, making the offer less attractive.

For more, see our guide to deferring the state pension.

10: Receive the state pension

When? At state retirement age

Your state pension age is the point at which you’ll receive the government-provided state pension. For men, this is currently 65 and for women it is currently 62, increasing to 65 by November 2018.

The amount of state pension you get will change in April 2016. The basic and additional state pensions are going to be replaced by a flat-rate state pension, worth around £148 per week in today's money.

For more, see our guide to the state pension.


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