Start with what the State Pension gives you

The full new State Pension is £241.30 a week — £12,547.60 a year — for the 2026/27 tax year. To receive the full amount you normally need 35 qualifying years of National Insurance contributions. Many people will receive less, and you can check your own forecast on GOV.UK. The point here is simple: the State Pension is your floor, and most people want income on top of it. GOV.UK — Your State Pension explained · 2026/27

The 4% rule: turning a pot into income

A widely used planning rule of thumb is that you can safely withdraw about 4% of your portfolio in the first year of retirement, growing the withdrawal with inflation, and expect the money to last roughly 30 years. It is a planning heuristic, not a guarantee. To turn a pot into income: pot needed = annual income ÷ 0.04 (equivalently, income = pot × 4%).

Worked examples for 2026/27

Target retirement incomeMinus State PensionGap to fundPot needed (4% rule)
£20,000 / year£12,548£7,452£186,310
£25,000 / year£12,548£12,452£311,310
£30,000 / year£12,548£17,452£436,310
£35,000 / year£12,548£22,452£561,310

The 4% rule is a planning rule of thumb, not a guarantee. Withdrawal rates vary with market conditions, inflation and how long retirement lasts.

What the numbers assume

These examples assume you receive the full State Pension and that the 4% rule gives you a sustainable withdrawal. They do not include the income tax you may pay on private pension withdrawals (you get a 25% tax-free lump sum first), nor tax on State Pension. They also ignore market volatility — a real retirement pot does not grow at a constant rate.

How to build the pot

For most employees, workplace pensions are the highest-value first step: in 2026/27 the minimum total contribution is 8% (typically 5% from you including tax relief and 3% from your employer), on earnings between £6,240 and £50,270. Contributions benefit from tax relief at your marginal rate, and the annual allowance is £60,000. Over 30 years, saving £500 a month at a hypothetical 7% return compounds to roughly £610,000 — comfortably above the £436,000 needed for a £30,000 income in the table. GOV.UK — Auto-enrolment · 2026/27

Frequently asked questions

Is the State Pension enough to live on?
It depends on your spending. £12,548 a year is below the typical amount most people want in retirement, which is why most planners treat it as the foundation and build private pension income on top.
What is a safe withdrawal rate?
The classic 4% rule is a common starting point for a roughly 30-year retirement. A more cautious 3% gives more margin; a higher rate increases the risk of running out of money.
Does this include the 25% tax-free lump sum?
No. The figures assume the whole pot generates income. You can normally take 25% of your pension pot tax-free (up to the £268,275 lump-sum allowance) before withdrawing the rest as income.
Will the State Pension be enough in 20 years?
The State Pension is usually increased each year (the triple lock). The £12,547.60 figure is for 2026/27 only — future amounts will be higher in nominal pounds, but so will prices and your own income target.
Educational tools only — not financial advice. Retirement planning involves assumptions about returns, inflation and taxes that will not hold exactly in practice.