FAQ
What is a safe withdrawal rate?
There isn’t one rate that is safe for every UK pot. Oakspan shows the old 4% rule beside an inflation-linked income that lasts to the age you chose, and a 20% shock test.
Nobody can name a withdrawal rate that is safe for every pot, every retirement length and every market. The figure people still quote is the 4% rule: take 4% of the invested fund in year one, then raise that pound amount with inflation. It came from US historical studies of a 30-year retirement. A UK pot, a State Pension that starts at 67, and a retirement that might last longer than 30 years are a different problem.
Oakspan shows 4% of the invested pot after any tax-free lump sum as a comparison only. That number is not then inflated and stress-tested. It is a familiar yardstick, not the result.
The income Oakspan actually searches for
Sustainable income is the highest withdrawal, in today’s pounds, that still lasts to your target age when it rises with your inflation assumption and the pot grows at the retirement rate you chose. The search tries incomes until it finds the boundary between “lasts” and “runs out”. The withdrawal rate beside it is that private income (at retirement, after inflation from today) divided by the invested pot.
Because the State Pension can take over part of the target, a UK sustainable rate on the private pot is often higher than 4% in the early years and lower later — or the other way around if you retire long before State Pension age and the pot has to carry the full income alone. Read the year-by-year table, not just the percentage.
The 20% shock, and annuities
A smooth growth rate hides sequence risk. Oakspan reruns the same desired income after cutting the pot by 20% at retirement, before the lump sum. If the date collapses, the plan was leaning on early good years you may not get. It is one shock, not a full set of historical paths.
The annuity lines convert the invested pot at the rates you type, defaulting to 6.2% level and 3.8% inflation-linked. A level annuity will not rise with prices. An indexed one usually starts lower and cannot run out. Neither is a live quote: health, a spouse’s pension and guarantee periods change the price. For a guaranteed income, get an open-market quote rather than treating those defaults as an offer.
Keep reading
- Previous: Can I use this for a SIPP and a workplace pension?
- Next: Is this financial advice?
- Try the numbers on the private pension calculator.
- Read the pension guide and the 2026/27 rates.