FIRE calculator — methodology

The number

pot required = annual income ÷ withdrawal rate
multiple of income = 100 ÷ withdrawal rate

At 4.00% the multiple is 25, which is the arithmetic behind the phrase “25 times your spending”. The rate cannot be zero — a rate of nothing needs a pot of everything, and every goal seeker rejects a non-finite target — so the field’s floor is 0.10% and clearing the box gives that rather than the usual neutral zero.

The date, and why there are two pots

Both pots run in months, and there is one loop for both. Contributions arrive at the end of each month — the more conservative of the two conventions, fixed here and stated rather than left to a default; the investment calculator is where the frequency and the timing are choices.

balance ← balance + contribution        at the end of the month
balance ← balance + growth on it        one twelfth of the annual rate, compounded
balance ← balance − platform charge     on the value of the pot

Every figure is a whole number of pence and every row satisfies opening + paid in + growth − charges = closing exactly, so no headline can disagree with the schedule it was read off. The year of arrival is the first year-end at which the combined balance meets the target, found by scanning one long schedule rather than by rearranging a formula — the same reason the engine’s own year solver scans: a pot with a poor rate and modest contributions can cross a target and come back down, and a first crossing is well defined whatever shape the curve has.

The pots are separate because a UK pension is behind an age. Projecting one combined balance answers “is the money there” and cannot answer “can I reach it”, which is the question that decides whether a plan works. The accessible side is read off its own schedule; the locked side is the total less that, so the split adds to the total exactly rather than to within a rounding of it.

Today’s money, and the one place it leaks

Spending is stated in today’s terms and a withdrawal rate is a real rate, so the growth field asks for a return after inflation and every balance on the page is read as today’s money. Mixing a nominal growth rate into that comparison would not be a rounding problem — it would put two different sorts of pound on the same line, and it would make the sustainable-income figure look far larger than the withdrawal rate for no reason other than the units.

The leak is tax. Income tax thresholds are not linked to prices, so the tax section applies 2026/27 thresholds to money in today’s terms. A plan arriving in twenty years meets whatever the thresholds are then, and nobody can tell you what those are. The page states this rather than quietly indexing something that is not indexed.

The bridge: the years between stopping and pension access

When the combined pot reaches the number at age A, and the pension access age you entered is P, there are max(0, P − A) years to be funded from the accessible pot alone. Two questions are asked of that pot, and both are answered by re-running the projection rather than by multiplying:

does it last?   drawdown(accessible pot, income, P − A years) → depletion period
what would?     least starting balance whose drawdown never falls short

“income × years” is the tempting shortcut and it is wrong twice over: it ignores the growth the bridge earns while it is being spent, and it ignores the charge taken out of it. The second line is a fourth goal seek that projection-core does not export — the package solves for a contribution, a return and a term, all of which hold the starting balance fixed. It is a bisection over the same project call rather than a discounted target, for the reason the package gives everywhere else: a capped platform fee is not linear in the balance and per-period rounding to the penny is not linear in anything, so a closed form agrees with the schedule most of the time and misses it exactly where a reader would check.

The access age is a field and this page asserts nothing about it. No age of any kind appears in the tax engine behind this site. The normal minimum pension age has already been legislated to rise, and some older schemes carry a protected age of their own. A calculator that typed a year in would be publishing an unverified figure wearing the appearance of a statutory one, inside the blast radius of a stamp that does not cover it. It is also a genuine risk to a plan — an age that moves moves the bridge — and that is said next to the field rather than in a footnote.

The tax, and which wrapper the income comes out of

Taxable pension income is earned income in the year it is withdrawn. It is added to your other income and charged at whatever rate that income has already reached — not started again at the personal allowance. An ISA withdrawal is not income at all: it does not appear on a tax return, it does not use the personal allowance, and it does not push anything else into a higher band.

tax attributable = tax(other income + the draw) − tax(other income)

Both figures come back from the engine and are subtracted. Nothing here multiplies an amount by a rate, which is why the answer is right for a reader inside the personal allowance taper as well as one below the personal allowance. Normally 25.00% of a defined contribution pot can be taken free of income tax; this page does not spread that across the drawdown, so its pension figure is the higher reading — the drawdown calculator takes the lump sum first. No National Insurance is charged on a pension withdrawal at any age, so none is shown.

Rates and allowances used by the tax section

The ISA limit is on this page because it is a constraint on the plan rather than on the tax: it caps how fast the accessible side can be built, which is what decides whether the bridge is fundable. Money above it can still be invested, in a general investment account, where dividends and gains are taxable and where this calculator does not follow it.

Sources

• gov.uk — Income tax rates and allowances: current and past
• gov.uk — Tax when you get a pensionFor the tax treatment of drawdown income and the share of a pot that can normally be taken free of income tax.
• gov.uk — Individual Savings AccountsFor the annual subscription limit, which is what caps how fast the accessible side of a plan can be built.
• gov.scot — Scottish income tax rates and bandsIncome tax on a pension withdrawal is devolved. The published page still titles its table “Proposed Bands”; the bands are in force, agreed by Scottish Rate Resolution.

The bounds, which are the engines’ legal domain rather than round numbers

• Growth floors at -99%, not −100%. The projection engine rejects an annual rate of exactly −1 — a total loss is not a growth assumption — and the number field’s clamp is inclusive, so a floor of −100 would be an unhandled throw reachable by typing a minus sign.
• The charge is capped at 5.00% a year. The income solver refuses a periodic platform fee above 1, because above it the objective it bisects stops being monotone and the answer would be a plausible wrong number. At monthly periods this cap is three orders of magnitude below that, so the precondition is discharged by the bound rather than by a guard.
• The withdrawal rate floors at 0.10%, and an empty box means that rather than zero. Every other field on the page treats an empty box as the neutral value — no growth, no charge, no contribution — because zero is the only value that asserts nothing. A withdrawal rate is the exception: zero is a division by zero, so the least extreme legal value is the floor.

What it does not model

• Any sequence of returns. One rate, every month, for the whole term. This is the largest gap between the arithmetic and a retirement, and it is why the sustainable-income figure is bigger than any withdrawal rate anybody proposes.
• The state pension — no age, no amount, no forecast. Put it in the other-income box yourself if you want it in the tax figure.
• Tax while the accessible pot is being built. Money above the ISA limit sits in a general investment account where dividends and gains are taxable; this page treats the accessible side as untaxed throughout, which flatters it.
• The lump sum allowance, the annual allowance and its taper, the money purchase annual allowance, defined benefit pensions, and emergency tax on a first withdrawal.
• Anything about you. No life expectancy, no health, no partner, no property, no care costs. This is information, not advice: it recommends no rate, no amount, no wrapper, no product and no provider.