Can I retire on £200,000?

On the assumptions below, £200,000 in pensions and ISAs gives a take-home income of about £19,100 a year from 65 until 95, in today's money, including the full state pension from 67. Retiring at 60 it's about £16,600 a year, and at 55 about £14,500.

Those are the most that lasts on steady growth. Real markets rise and fall: taking home £19,000 from 65, the money lasts to 95 in 48 out of 100 market tests. Lower incomes last more often, as the table further down shows.

Worked example: £200,000 at 65, taking home £18,000 a year. Your money lasts to 95, with £48,788 left. Your money lasts to 95 in 65 out of 100 market tests.

Retiring at 55, 60, 65 or 67 with £200,000

Retiring at	Take-home a year that lasts to 95
55	£14,500
60	£16,600
65	£19,100
67	£20,400

Each row is one person with £160,000 in a pension and £40,000 in a stocks and shares ISA, growing 5% a year before fees, with inflation at 2.5%. They get the full new state pension of £12,548 a year from 67, and the money has to last to 95. The calculator draws from the pots in its tax-smart order.

Retiring earlier means more years to pay for, and more of them before the state pension. The example assumes pensions open at 57, the minimum age for most people from 6 April 2028, so retiring at 55 leans on the ISA for the first two years.

How long £200,000 lasts at different incomes

Take-home a year from 65	Steady growth	Lasts to 95 in
£17,000	lasts to 95	81 out of 100 market tests
£18,000	lasts to 95	65 out of 100 market tests
£19,000	lasts to 95	48 out of 100 market tests
£20,000	falls short from 90	35 out of 100 market tests

"Steady growth" is 5% every year. The market tests give each year a random rise or fall around that 5%, 500 times over. Taking home £17,000, the money lasts to 95 in 81 out of 100 of them. At £20,000 it falls short from 90 even on steady growth.

What the state pension adds

The full state pension is 66% of the £19,100 figure. Without any state pension, the same pots would pay about £8,700 a year from 65. Your GOV.UK forecast shows what you're on track for, and you can enter it in the calculator.

Retiring before your state pension starts

Retiring at 60 on £16,600 a year, about £16,644 a year comes out of the pots, before tax, until the state pension starts at 67. After that it's about £5,040 a year. Those bridge years cost the most. See can I retire at 60? for more on them.

Tax on the income

At 68, on the £19,100 plan, £7,914 comes out of the pots and the state pension adds £12,548. Taxable income is £18,484, none of it above the 20% band. Income tax is £1,362, 6.7% of the total. The rest is tax-free: a quarter of each pension withdrawal and everything from the ISA. Tax thresholds are frozen until April 2031, so in today's money they shrink a little each year.

As a couple

A couple aged 65 with £200,000 between them, each with half the pension, the ISA in one name, and two full state pensions from 67, can take home about £30,600 a year together until both are 95 on steady growth. Two personal allowances and two state pensions are why that's more than one person's £19,100. Couples mode in the calculator works this out for your own figures.

The 4% rule

The "4% rule" takes 4% of the pot in the first year, £8,000 here, then raises it with inflation. It comes from US research on 30-year retirements and leaves out tax and the state pension. The calculator's figures include UK tax, the state pension, fees and a plan to 95, so they come out differently.