What you want to achieve
How to build a retirement income from your investments
A retirement pot is only useful if it can pay you reliably for as long as you need it. That takes a plan for income, not just a plan for growth.
The challenges
- Not knowing how much income your pot can safely support.
- Selling investments during falls to fund spending.
- Inflation eroding a fixed income over decades.
- Juggling State Pension, workplace pensions, SIPPs and ISAs.
How a disciplined process helps
Start with the gap
Add up the income you expect from the State Pension and any final-salary schemes. The gap between that and what you want to spend is what your investments must provide.
This number is more useful than the size of your pot.
Choose a withdrawal method
Common approaches include a fixed percentage, a fixed amount adjusted for inflation, or flexible rules that take less after poor years. Each has trade-offs between certainty and longevity.
Our article on living off your investments compares six methods.
Protect against bad timing
Holding a year or more of spending in cash means you are not forced to sell in a fall. Rebuild the buffer after good years.
Review your plan annually rather than reacting to every market move.
Where to start
- Living off your investmentsSix withdrawal strategies compared.
- Retiring on £250kThe data, the plan and what makes it work or fail.
- Retirement planning articlesHow much you need and how to plan it.
- Guide: Is my pension performing?A step-by-step way to check your pension against sensible benchmarks.
Questions people ask
What is a sustainable withdrawal rate?
It depends on your age, investments and flexibility. Many people start modestly and adjust after poor years; our withdrawal article explains the main approaches.
Should I buy an annuity?
Annuities provide certainty; drawdown provides flexibility. Many people combine them. For a personal recommendation, speak to a regulated adviser.
How often should I review my retirement income?
Once a year is enough for most people, with extra checks after large market moves.
Important: this page is education and information only. It is not financial advice or a personal recommendation, and it does not take your circumstances into account. The value of investments and pensions can fall as well as rise, and you may get back less than you put in. Past performance is not a reliable indicator of future results. If you are unsure what is right for you, speak to a regulated financial adviser.