How the calculator works

What it does

You give it your pots (pensions, ISAs, cash, guaranteed annuity rate policies and final salary pensions), the income you want at each stage of retirement, your state pension and any other income. It then works through your retirement one year at a time, from your age now to the end of the plan:

1. Your income target for the year rises with inflation.
2. Guaranteed income is counted first: the state pension, final salary pensions, annuities and any other income.
3. If that falls short, it takes money from your pots in small steps, £250 at a time, until the target is met, checking the tax after each step.
4. It works out the year's income tax, including tax on savings interest.
5. Each pot grows by its growth rate minus its fees, and any payments in are added.

The first year it can't meet the target is when your income falls short. A state pension, an annuity or a final salary pension carries on paying after that, so the results say what still comes in. Every figure is shown in today's money, so £20,000 at 80 buys what £20,000 buys now.

Which pot it draws from

Five orders are worked out side by side, each with the tax while you're alive, the tax after (inheritance tax, plus the income tax your family pays on pensions inherited after 75), and what your family gets:

• Tax-smart: pension money first, up to your personal allowance, then up to the end of the 20% band. Then the tax-free pots (ISAs and cash). Pension money taxed at 40% or more comes last.
• Tax-free allowance first: pension money up to your personal allowance, then the tax-free pots, then more pension.
• Pensions first: all pension money, then the tax-free pots.
• ISAs and savings first: the tax-free pots, then pensions.
• Your own order: each pot in the order you set, with no limits.

Your results use the order where your money lasts longest. Where more than one lasts as long, the one that leaves your family the most is used. All five are shown, so you can see the difference. Which order fits you depends on things the calculator doesn't know, such as your health and your family's plans.

A pension pot can't be drawn before its access age. That's 57 for most people from 6 April 2028, or 55 where a scheme gives a protected age.

The tax rules it uses (2026/27)

Rule	Figure
Personal allowance	£12,570, reduced by £1 for every £2 of income over £100,000
Income tax (England, Wales, Northern Ireland)	20% on the first £37,700 above the allowance, 40% to £125,140, 45% above
Scottish income tax	19% to 48% in six bands, for tax codes starting with S
Savings interest outside an ISA	£5,000 starting rate band, then a personal savings allowance of £1,000 (basic rate) or £500 (higher rate). Taxed at 20%, 40% or 45%, rising to 22%, 42% and 47% from April 2027
Tax-free cash from pensions	25% of each pension, up to £268,275 in total
Full new state pension	£12,548 a year
Inheritance tax	40% above £325,000, plus £175,000 if your home goes to your children or grandchildren, tapered away above £2,000,000. Unused pensions count from 6 April 2027
Pension payments in	£60,000 a year, or £10,000 once you've taken taxable money from a pension

Couples get marriage allowance in years one has income under the personal allowance and the other pays only the basic rate, counting savings interest as income. Gift Aid donations widen the 20% band. Before you retire the calculator doesn't know your earnings, so interest on cash outside an ISA in those years is taxed as if it were your only income.

Tax thresholds stay frozen until April 2031, then rise with inflation in the calculator. State pension age comes from your date of birth, using GOV.UK's timetable. The calculator states current law: future Budgets can change any of these.

Couples

In couples mode each person has their own allowance, tax bands, state pension and pots, and the calculator balances withdrawals across both of you to keep the household's tax down. When one of you dies, their state pension stops, a final salary pension pays the spouse's share you set, joint-life annuities carry on, and the pots pass to the survivor. The household's income target drops by the share you set (25% unless you change it). Pensions inherited before 75 are tax-free to draw; after 75 they're taxed as the survivor's income.

Gifts to family

Regular gifts are paid like spending. The part covered by income left after tax and your living costs is free of inheritance tax at once. Tax-free cash and ISA withdrawals don't count as income here, as HMRC hasn't confirmed they do. The rest, and one-off gifts, use the £3,000 a year allowance, then count if death comes within 7 years, with taper relief. If money runs short, gifts are cut before your own spending.

Part-time work and care homes

Part-time work after you retire is taxed as your income. With two of you, each person's work is at their own ages and taxed as their own income. National Insurance isn't included.

With the care home box ticked, the fees are part of the plan. With two of you, either or both can go in, at their own ages. While someone is in a care home, the fees replace their share of the living costs. Your money pays first. Then the fees are owed on your house (a deferred payment, at 4.65% a year). While a partner or a qualifying relative still lives in the house, it isn't counted, and the council pays what your money can't. The calculator doesn't model the council's savings limit, so your money runs down further than it would. In Scotland, the free personal care payment comes off the weekly fee.

Property and things you'll sell

A rental or second property, a campervan or car, or crypto or shares outside an ISA. Each grows (or loses value) at the rate you set. When it's sold, what's owed on it is paid off and the rest goes into the savings pot you choose. Capital Gains Tax is on the price less what you paid and your costs of buying, improving and selling: the first £3,000 of gains a year is free, then 18% on the part that fits in your unused basic rate band and 24% above. Cars and campervans you use yourself are free of it. Rent is taxed as your income from when you retire, at 2 points more from April 2027 in England, Wales and Northern Ireland, with your allowance used against your other income first. Anything not sold counts towards your estate, less what's owed on it. A mortgage or finance is taken as staying the same until the sale. With two of you, a partner's things pass to the survivor at their value then, with no gains tax on what they gained before.

How sure is the answer?

The main result grows each pot by exactly the rate you entered, every year. Real markets go up more in some years and down in others, so the calculator also shows:

• Stress tests: market falls (up to 3, at the ages and sizes you choose, each recovering over the years you set, 5 unless you change it), growth 2 points lower every year, and living to 100. Tick one or more to see the whole page with them. Each test uses the order that lasts longest in those conditions.
• Market tests (Monte Carlo simulation): your plan run 500 times, with a random rise or fall each year around your growth rates. The typical size of a year's rise or fall is 12% unless you choose 8% or 16%. All your investments move together, as one market. Cash, final salary pensions, annuities and the state pension don't move. The share of tests where the money lasts is the "out of 100" figure.

The same figures always give the same tests, so a change you make isn't hidden by random noise. The tests are a model, not a forecast: real markets can do better or worse than any of them, and the calculator keeps inflation steady.

What it leaves out

• Investments outside pensions and ISAs, so no capital gains tax or dividend tax.
• Buying an annuity with a pension pot, other than a guaranteed annuity rate policy.
• Spending that changes after good or bad years, and one-off costs such as a new car.
• Means-tested benefits such as Pension Credit.
• Tax in other countries.
• Lifetime ISAs, salary sacrifice and carrying forward unused pension allowance.
• Pensions you've already started drawing from: every pension pot is treated as still having its 25% tax-free share.
• National Insurance on earnings before you retire.

How it's checked

Every change runs a suite of hundreds of automated tests before it can be published. They include:

• worked examples from the calculator's specification, matched to within 1%;
• a comparison, year by year, with an earlier version of the calculations written separately, on the specification's examples and 80 generated plans;
• tax checks against HMRC's published rates;
• the whole page rendered for many different plans, failing if any wording strays into advice.

Every figure in the guides comes from the calculator itself, so a guide can't say something the calculator doesn't.

Information, not advice

The calculator shows what your own figures lead to under today's rules. It doesn't tell you what to do, rank products or point you to providers. For free, impartial guidance, Pension Wise from MoneyHelper offers appointments to anyone 50 or over with a personal or workplace pension.

Your privacy

The calculations run in your browser, and so does the PDF report if you download one. Nothing you type is sent to us or anyone else, and nothing is stored except in your own browser. Visit counts don't use cookies, don't keep IP addresses, and never include your figures.

How the calculator is paid for

The calculator and guides are free. "Things to look into" can show listings from firms that pay to appear. They're labelled as paid and shown in a new random order each time. Free guidance comes before them. Listings don't change any figure, and nobody can pay to appear in a guide.