What is phased retirement? A UK worked example

Updated 19 October 2026. Figures checked against official sources on 19 October 2026.

Phased retirement means stepping down gradually instead of stopping all at once: fewer hours or part-time work for a few years, and taking your pension in stages as you need it.

The calculator is a worked example: someone aged 58 wanting £27,000 a year take-home from 60, earning £15,000 a year from part-time work until 65. From 87, your income falls short of the £27,000 a year you want.

Worked example

From 87, your income falls short of the £27,000 a year you want.

Age now: 58
Retire at: 60
Pots: £345,000
Take-home wanted: £27,000 a year
Plan until: 95

Opens the calculator with this example. Any figures you've saved there are kept, and you can bring them back.

Part-time work against stopping at 60

The same person and the same pots, either working part-time until 65 or stopping at 60:

	Part-time work to 65	Stopping work at 60
Pots at 65	£311,018	£234,434
On steady growth, the money	falls short from 87	falls short from 81
Lasts to 95 in	28 out of 100 market tests	15 out of 100 market tests
Income tax over the whole plan	£66,228	£46,683

The earnings pay part of the income, so the pots are drawn less in the early years and have longer to grow. More income tax is paid, because the earnings are taxed too.

Taking a pension in stages

A bit at a time. A quarter of each withdrawal is tax-free and the rest is taxed as income (an uncrystallised funds pension lump sum, or UFPLS).
Tax-free cash first. Take up to 25% tax-free and move the rest into drawdown, then take income when you want it.
Taking any taxable money limits what you can pay into pensions to £10,000 a year. See the money purchase annual allowance.

Try it with your own figures

The calculator's Part-time work step takes your earnings and the ages they start and stop. Try the calculator with your own figures.

Questions people ask