Annuity vs Drawdown Calculator
Compare buying a guaranteed annuity income with keeping your pension pot in flexible drawdown. See the indicative annuity income your pot would buy, how long drawdown would last at your chosen income, and the longevity breakeven age where an annuity starts to pay off.
The amount you could use to buy an annuity or keep invested in drawdown.
Older ages get higher annuity rates because the income is paid for fewer expected years.
RPI-linked starts lower but rises with inflation; joint-life keeps paying a survivor.
The income you want to draw from the pot each year (on top of your State Pension).
Assumed annual investment growth on the remaining drawdown pot.
Full new State Pension for 2025-26. Set to 0 if not yet claiming.
Any other taxable income (e.g. a defined-benefit pension or earnings).
Guaranteed income for life
£14,400 / year
Paid every year for life, no matter how long you live and regardless of investment performance.
Flexible income, longevity risk
£12,000 / year
Lasts about 18 years (depletes around age 83).
What this means
Drawdown depletes around age 83; an annuity guarantees income beyond that, with no flexibility or inheritance. If you expect to live well past age 83, the annuity's longevity protection becomes more valuable.
Annuity figures are indicative
Annuity rates shown are indicative (as of 2026-05) and track gilt yields — they change daily. Get a live, personalised quote via the Open Market Option before deciding. This is not financial advice.
Annuity vs Drawdown: The Trade-Off
Guarantee vs Flexibility
An annuity converts your pension pot into a guaranteed income paid for the rest of your life. You can never run out, and you don't have to manage investments or worry about market falls — but in exchange you give up access to the capital and the ability to vary your income. Drawdown keeps your pot invested so you stay flexible: you can take more in some years and less in others, and anything left when you die can pass to your beneficiaries. The cost of that flexibility is longevity and investment risk.
Longevity Risk
The central question is how long you live. With drawdown, a long retirement combined with poor early investment returns can exhaust the pot. An annuity removes that risk entirely — it keeps paying however long you live. The breakeven age shown above is the point where drawdown is projected to deplete; living well beyond it is where the annuity's guarantee earns its keep.
Inflation: Level vs RPI
A level annuity pays the same cash amount every year, so its real value is eroded by inflation over a long retirement. An RPI-linked annuity rises with prices but starts at a much lower level — it can take 15–20 years to catch up. Drawdown income can be increased over time if the pot performs, but that is not guaranteed.
Joint-Life and the Open Market Option
A joint-life annuity continues paying a spouse or partner after you die, at the cost of a lower starting income. Whatever type you choose, always exercise the Open Market Option — shop around all providers rather than accepting your existing pension company's offer, and disclose any health or lifestyle factors that could secure a higher enhanced rate.
Mixing the Two
You don't have to choose one route for the whole pot. A popular approach is to annuitise enough to cover essential bills — guaranteeing they're always met — and keep the rest in drawdown for flexibility, growth and inheritance. You can also buy annuities in stages as you age, when rates are typically higher.
A Note on the Annuity Rates Shown
The annuity income shown here is indicative only. Real annuity rates track gilt yields and move daily, and the rate you're actually offered depends on your age, health, lifestyle, the options you select, and the provider. Use these figures to understand the shape of the annuity-vs-drawdown decision — not as a quote. Before committing, get a live, personalised quote through the Open Market Option. This page is general information, not financial advice; consider speaking to a regulated adviser or the free Pension Wise service.
Frequently asked questions
Is an annuity or drawdown better?
Neither is universally better — it depends on your priorities. An annuity guarantees a set income for life, removing the risk of running out of money but giving up flexibility and any inheritance. Drawdown keeps your pot invested and flexible, and anything left passes to your estate, but you carry the risk that the pot runs out if you live longer than expected or markets fall. Many retirees use both.
What is the Open Market Option?
The Open Market Option is your right to shop around for an annuity from any provider, not just your existing pension company. Rates vary significantly between providers, and disclosing health or lifestyle factors can secure a higher "enhanced" annuity. Always get several quotes before buying — the rate is fixed for life once you commit.
How long will my pension pot last?
It depends on the pot size, the income you draw, investment growth and tax. A common rule of thumb is that drawing around 4% a year of a balanced pot can be sustainable for 30+ years, but drawing more — or facing poor early returns — can deplete it much faster. This calculator projects the depletion age year by year for your chosen income.
Can I mix annuity and drawdown?
Yes. A common strategy is to use part of your pot to buy an annuity that covers essential bills, guaranteeing they are always met, and keep the rest in drawdown for flexibility and growth. You can also buy annuities in stages as you get older, when rates are typically higher.