Safe Withdrawal Rate Calculator UK: Inflation-Tested

Figures quoted below use the calculator's default plan: a £300,000 pension and a £100,000 ISA, £20,000 a year of spending from age 60 for 30 years, the full State Pension from 67, and the default assumptions. If you have changed any inputs, press Reset to see the same figures.

The inflation you did not expect is what hurts

A fixed safe withdrawal ratesafe withdrawal rate (SWR): The share of a portfolio you draw in year one of retirement, uprated with inflation, that research suggests survives a full retirement. The 4% rule is US data; UK estimates run from 3.1% to 4.1%, and none of them models a pension pot. assumes your spending rises with inflation each year. What decides whether that is safe is whether your investments earned that inflation too. Share and gilt returns are priced on the inflation markets expect. If inflation turns out higher, your withdrawals still rise with it, but the returns do not catch up, so every year's realA value adjusted for inflation so it reflects actual purchasing power rather than the cash amount. If your pay rose 3% but prices rose 4%, your real-terms pay fell. return is cut.

The calculator shows the effect directly. On the default plan, with inflation 2 points a year higher than markets expected, the sustainable spend falls from 5.3% to 4.7% of the starting pots, and the chance that a £20,000 spend lasts 30 years falls from about 95% to about 82%. Each point of surprise costs about 0.3 of a point of withdrawal rate, between 0.2 and 0.4 across the range we tested.

Now take the same extra inflation, but expected. If returns had priced it in, they rise with it, and in this model the sustainable spend stays at 5.3%. Only the surprise does the damage. There is one exception while income tax thresholds are frozen: more inflation drags more income into tax. On the default plan, the median lifetime tax bill rises from about £17,000 to about £23,000 in today's money, even when returns keep pace.

The inflation assumption inside every safe rate

Morningstar's UK 2026 study puts a safe starting withdrawal rate at 4.1%, and it assumes inflation of 2.15% a year. UK CPIConsumer Prices Index: The ONS measure of UK inflation used by the Bank of England for its 2% target. It tracks prices of about 760 goods and services weighted by average household spending, excluding owner-occupied housing costs. inflation averaged 3.30% a year over the 10 years to 2025, 2.44% over the 30 years to 2025, and 2.81% a year from 1988 to 2025 (ONS series D7BT). The 10-year figure carries the 2022 and 2023 spike, 9.1% and 7.3% a year. An assumption of 2.15% is close to the Bank of England hitting its 2% target. That is a fair forward view, but it sits below the realised average over every one of those windows.

Markets price more. On 28 September 2026, UK gilt prices implied CPI inflation of about 2.85% a year over the next 10 years (Bank of England yield curves, converted from RPI). In its September 2026 statement the Bank of England expected CPI inflation, 3.1% in August 2026, to reach around 3.75% in the last quarter of 2026 and slightly above 4% in the first quarter of 2027. The calculator starts from 2.85%, and the surprise input lets you test what happens if inflation runs higher than that for years.

Where income tax comes in

Morningstar's figure "relates solely to investment-portfolio withdrawals", and the study says it "doesn't incorporate the impact of portfolio expenses or taxes". A pension is different. A UFPLSUncrystallised Funds Pension Lump Sum: Taking pension money in chunks where each withdrawal is 25% tax-free and 75% taxed as income, without moving the whole pot into drawdown. withdrawal is 25% tax-free and 75% taxable. This calculator works out the gross SIPP withdrawal that leaves your chosen spend after income tax, using the site's own tax engine for 2026/27, including the personal allowanceThe amount of income you can earn each year before income tax. It is £12,570 for 2026/27, tapering away by £1 for every £2 of income over £100,000. and Scottish rates. The default order draws the pension up to the personal allowance first and the ISA after, which keeps the tax low. Tax bites once your taxable income passes the personal allowance: when the State Pension starts, or when the spend is large.

Frozen thresholds add to the bill. The personal allowance and the higher-rate threshold are frozen in cash until the end of 2030/31. The calculator models that freeze, then indexation with CPI, which is the default in law for both unless Parliament overrides it (Income Tax Act 2007, section 57, and section 21). You can also choose a longer freeze. On the default plan, the freeze more than doubles the median lifetime tax bill, from about £7,500 to about £17,000.

The portfolio-only answer on the default plan, 3.25%, sits below Morningstar's 4.1% for three reasons: it pays 0.5% a year in fees, holds 60% in shares rather than 30%, and uses the assumptions below rather than Morningstar's own. From the pots alone this plan stays almost inside the personal allowance, so income tax plays almost no part in that figure. Move the dials and the answer moves with them. For the order of good and bad years and the spread of published UK rates, see how long will my pension pot last.

What this calculator assumes, and what it leaves out

Each default is either taken from a public source or labelled as our assumption:

• Gilt real return 2.55%, inflation priced in 2.85%, cash real return 2.05%. From the Bank of England's 10-year real, implied-inflation and OIS curves on 28 September 2026, converted from RPI to CPI with the OBR's estimate of the gap between the two. These are market prices, not forecasts, and they move, so the date shows when we read them.
• Equity real return 6.4% a year (arithmetic). Built from the statutory illustration rate the Financial Reporting Council sets for pension projections (AS TM1: 7% nominal for its highest-volatility funds, with 2.5% inflation, about 4.4% after inflation), plus the allowance for volatility that an arithmetic mean needs. It is a regulator's illustration basis, not a prediction.
• Volatility of 20% for equities, 9% for gilts and 1% for cash, an equity-gilt correlation of 0.3, and inflation volatility of 1.75%. Our assumptions, checked against Bank of England long-run UK data and ONS CPI history.

The model runs 1,000 simulated futures with a fixed starting point, so the same inputs always give the same answer. Across seven different starting points, the default plan's answer ranged from 5.15% to 5.4%, so read any result to the nearest quarter point. It holds the State Pension flat in today's money (the triple lock would add to it), uses 2026/27 tax rates for every year, covers one person, and leaves out care costs, annuities and rules that cut spending after a bad year.

The spending pattern is a choice. Flat is the default because it is the best UK evidence: the Institute for Fiscal Studies found spending per person within a generation is "flat or even slightly increasing" through retirement (IFS Report R209). The UK evidence option follows its figures. The US smile follows David Blanchett's 2014 research on American retirees. Care costs are not in either: IFS notes it cannot observe "the (potentially very large) care costs at the end of life". Those costs fall on a minority rather than on the average retiree.

Your own inflation can differ from CPI, which is its own kind of surprise: our personal inflation guide shows how to measure it. If you are still building the pot, the FIRE calculator covers the years before you draw, and the pension lump sum tax calculator covers tax-free cash and UFPLS in detail.