Investing · General financial education

Drawing down savings

The drawdown phase is the time when saved money is paid out instead of only being paid in. There is no universal rate that fits everyone.

In more detail

A guaranteed pension income, a drawdown plan and a lump sum are different payout methods. While money is being paid out, the order of returns bites harder: losses at the start weigh more, because less capital is left for a recovery. That is the subject of sequence risk. Finmon names no withdrawal rate.

Background

MoneyHelper explains, in the United Kingdom, the ways to take a workplace or private pension. This is orientation, not a product choice. Tax and time limits depend on the applicable law. Longevity risk means you could live longer than financially planned for. Finmon chooses no path.

An example

The same average yearly return can produce two different paths in drawdown when the weak years sit at the start or at the end. While money is still being added, the same order weighs differently. Finmon calculates neither path for a person.

A common misconception

There is a fixed percent that can be withdrawn safely every year.

The order of returns, costs, tax and how long life lasts shift the result. A universal rate would be a claim, not a calculation.

Source: MoneyHelper · taking your pension. Last reviewed: 2026-11-09. Editorially reviewed on 2026-11-09. Next review 2027-11-09. Version 0.2.0. Finmon explains. It does not advise. Not investment, tax or legal advice.