Annuity vs Drawdown Calculator

Guaranteed income for life, or keep the pot invested and flexible? Compare the income, the depletion risk and what your family inherits.

Income Difference per Year
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Annuity Income / Year
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Drawdown Income / Year
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Drawdown Pot Runs Out At
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Inheritance Left (Drawdown)
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Total Annuity Income by Then
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Total Drawdown Income by Then
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Drawdown Pot Balance vs Cumulative Annuity Income

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Annuity vs Drawdown FAQs

What is the difference between an annuity and drawdown?
An annuity converts your pension pot into a guaranteed income for life: total certainty, but the capital is gone and income usually stops or reduces at death. Drawdown keeps your pot invested while you withdraw flexibly: your money can keep growing and be inherited, but it can also run out if markets disappoint or you live longer than planned.
Which pays more?
At recent rates around 7% for a level annuity at 65-66, the annuity pays notably more per year than the commonly cited 4% sustainable drawdown rate. The trade: annuity income is fixed forever (inflation erodes it) and normally dies with you, while a modest drawdown rate with decent growth can last indefinitely and leave the remaining pot to your family.
Can I combine both?
Yes, and many planners recommend exactly that: buy an annuity with part of the pot to cover essential bills (a guaranteed floor alongside the State Pension), and keep the rest in drawdown for flexibility, growth and inheritance. You can also buy annuities in stages · rates improve as you age and with health conditions.
What happens to each option when I die?
A single-life annuity normally stops at death · joint-life versions or guarantee periods continue payments in exchange for a lower starting rate. A drawdown pot passes to your beneficiaries: they draw it tax-free if you die before 75, or taxed at their marginal rate after 75. From 6 April 2027 unused pots also count toward Inheritance Tax · see our Pension IHT calculator.
What is a safe withdrawal rate?
The classic guideline is 4% of the initial pot per year, which historically survived most 30-year retirements. Early retirees often use 3-3.5% for safety; higher rates raise depletion risk, especially if markets fall early on (sequence risk). Annual reviews and the flexibility to trim spending in bad years matter more than the precise number.

For informational purposes only · Not financial advice · Annuity rates vary by age, health and product features; drawdown returns are not guaranteed and pots can run out · Income shown gross of tax · Take regulated advice or Pension Wise guidance (free, 50+) before choosing