Financial Freedom Calculator
What size portfolio could cover your monthly spending?
After-tax spending. Today’s money. Start with what you want to spend each month and deduct other income after tax.
Estimated portfolio needed
4% illustrative withdrawal rate · today’s money
- Other monthly income (after tax)
- £1,000
- Monthly spending gap (after tax)
- £4,000
- Annual spending gap (after tax)
- £48,000
£4,000 × 12 ÷ 4% = £1,200,000
Taxable withdrawals may mean you need more. This estimate does not allow for tax on investment withdrawals, fees or future inflation.
The other income entered covers your target. No portfolio withdrawal is required in this calculation.
5% means a smaller target, but a larger withdrawal from each pound invested. It is a comparison, not a recommended rate.
Compare withdrawal rates
| Initial rate | Portfolio target |
|---|---|
| 3%Selected | £1,600,000 |
| 3.5%Selected | £1,371,428.57 |
| 4%Selected | £1,200,000 |
| 5%Selected | £960,000 |
Progress towards target
0%- Current invested capital
- £0
- Remaining gap
- £1,200,000
Why the monthly spending gap × 300?
At 4%, the estimate is 25 times the annual spending gap. Multiply the monthly gap by 12, then by 25: 300 times the monthly amount. Taxable withdrawals may require a larger portfolio.
£3,300 monthly spending with no other income gives a £990,000 estimate. The article’s £5,000 monthly target, less £1,000 other income, gives £1.2m. Spending and other income are after tax; the portfolio estimates do not allow for tax on withdrawals.
How it’s calculated
Estimated portfolio = monthly spending gap × 12 ÷ (withdrawal rate ÷ 100)
Progress = current invested capital ÷ portfolio target × 100
The target is in today’s money. No future contributions or investment growth are assumed. Other income above the target gives a £0 portfolio requirement; there is no progress percentage when the target is zero.
What this number leaves out
The traditional 4% approach takes a percentage of the starting portfolio in year one, then adjusts that cash withdrawal for inflation. It is not 4% of the remaining balance every year. It came from historical US portfolio research around a 30-year retirement, not a guarantee for a UK investor or an early retirement lasting longer. Bengen’s explanation ↗ (opens in a new tab)
Tax, charges, investment mix, inflation and losses early in retirement all affect the outcome. This calculator does not model them, future spending changes or how long your money lasts. A concentrated AIM portfolio should not be assumed to support the same withdrawals as a diversified retirement portfolio. MoneyHelper on drawdown ↗ (opens in a new tab)
Use after-tax spending and income. The portfolio estimate does not allow for tax on investment withdrawals. GOV.UK: tax on pension income ↗ (opens in a new tab) Deduct only other income available from the start. Check your own State Pension forecast ↗ (opens in a new tab); entitlement and timing vary.
Illustrative calculation, not financial advice. Review your plans with a regulated adviser before making retirement decisions. Full disclaimer.