The formula
How to calculate withdrawal amount
This is the practical version of the withdrawal question: given a pot and a rate, what actually lands in the current account each month once tax has taken its share?
The effective rate is a blend, not a tax band. Withdrawals split across an ISA (no tax), a pension (25% tax-free, the rest taxed as income) and a taxable account (capital gains with an annual allowance) usually produce an effective rate well below the marginal one.
What to enter:
- Portfolio value
- Withdrawal rate (%)
- Effective tax rate (%) — blended across pension, ISA and taxable withdrawals
Results appear immediately — there is nothing to submit. Changing a field rewrites the link, so you can share the exact scenario you are looking at.
Worked example
Work through the defaults on this page:
- Portfolio value: 700,000
- Withdrawal rate: 3.75 %
- Effective tax rate: 15 %
That gives:
- Gross annual withdrawal: 26,250
- Net annual withdrawal: 22,312.5
- Net monthly: 1,859.38
Reading the result
The net monthly figure is the one to compare against your budget. Planning against the gross number is how retirees discover a shortfall in the first year.
Where this goes wrong. Forgetting that the first year is the anchor. Under the standard rule the amount rises with inflation each year thereafter and is not recalculated from the new balance, which means a bad first year has permanent effects.
About £28,000 a year at 4%, or £26,250 at 3.75%, before tax. What arrives net depends heavily on how the money is split between pensions, ISAs and taxable accounts.
Monthly suits cash flow and reduces the chance of selling everything on a bad day; annually reduces transaction costs and admin. The difference to long-run outcomes is small — pick whichever you will actually keep to.
The headline figure is gross annual withdrawal. With 700,000 portfolio value, 3.75 % withdrawal rate and 15 % effective tax rate, that comes to 26,250. Change any field and the figure moves with it.