Guide · 5 minute read · Updated 2 Jul 2026

Can I retire at 60 with £500k?

Probably, if a moderate lifestyle is the goal. Our drawdown engine puts the sustainable income at roughly £20,000 to £25,000 a year in today's money from the pot alone, and close to £30,000 in total once a full state pension arrives at 67.

What £500k sustains from 60

Our pension drawdown calculator runs a year-by-year simulation: you withdraw your income at the start of each year, the income rises with inflation so its buying power never falls, and the remaining pot grows at a flat rate. "Sustainable" means the pot pays that income in full every year through age 95.

On the calculator's default assumptions (5% annual growth, 2.5% inflation), a £500,000 pot drawn from age 60 sustains about £29,700 a year in today's money, provided a full new state pension joins in at 67. Strip the state pension out and the pot alone sustains about £20,500.

Put it another way with fixed targets: drawing £25,000 a year (state pension included) the pot lasts past 100 on those assumptions. Push the target to £30,000 and it runs out at 95, which is exactly on the edge. So £500k at 60 buys a solid middle income, not an extravagant one.

The seven-year bridge to the state pension

Retiring at 60 does not bring your state pension forward. If you reach state pension age between 2026 and 2028 it is 67, so the pot carries everything for seven years before any help arrives.

The full new State Pension in 2026/27 is £241.30 a week, which annualises to £12,547.60. Over the seven bridge years that is about £87,800 of income (in today's money) your pot must supply that the state would otherwise cover. The shape of a £25,000-a-year plan reflects this: in the engine's run, the pot funds the full £25,000 until 66, then the withdrawal roughly halves at 67 as the state pension takes over £12,548 of the load. The early years are the heavy lifting, which is also when the pot is biggest and most exposed to a market fall.

That makes your National Insurance record disproportionately important. The full new State Pension needs 35 qualifying years (for records built after April 2016; older records can differ, so check your forecast). Missing years can usually be bought back with voluntary Class 3 contributions at £956.80 per year, which is often exceptional value for someone retiring early with gaps. Our state pension top-up calculator shows the payback by age.

Growth and inflation move the answer by thousands

The headline numbers above lean on a 2.5 percentage point real return. Change that and the sustainable income (state pension included, to 95) swings hard:

• 3% growth, 2.5% inflation: about £25,000 a year.
• 2.5% growth, 2.5% inflation (no real return at all): about £24,000.
• 5% growth, 4% inflation: about £26,100. Higher inflation quietly does the same damage as lower growth.
• 6% growth, 2% inflation: about £33,800.

Notice the floor: even with zero real growth, £500k plus a full state pension still supports roughly £24,000 a year in today's money to 95. The state pension is doing a lot of the heavy lifting there; it is inflation-linked and never runs out. The pot-alone figures are far more sensitive, ranging from about £15,100 (3% growth) to £25,200 (6% growth).

The honest conclusion is that nobody can tell you which scenario you will get. Plan on the cautious numbers and treat the optimistic ones as upside.

What this model leaves out

The engine is deliberately simple, and three omissions matter. First, the income is gross: withdrawals beyond your tax-free element (usually up to 25% of the pot) are taxed as income, so £25,000 gross is less in your pocket. Second, growth is flat every year, but real markets are not; a crash in the first few years of drawdown forces you to sell more units at low prices, and the pot may never recover even if average returns end up fine. A cash buffer of one to three years' spending is the common defence. Third, it models one pot and the state pension only; any defined benefit pension, part-time earnings or a partner's income improves the picture, sometimes dramatically.

So, can you?

If your target lifestyle costs £20,000 to £25,000 a year in today's money, £500k at 60 plus a full state pension covers it with margin on middling assumptions, and just about covers it even on poor ones. If you need £35,000 or more, the maths gets uncomfortable fast. Your age, your spending and your assumptions are what decide it, so run your own numbers in the pension drawdown calculator, and stress them with low growth before you hand in your notice.

Common questions

How long will £500,000 last if I retire at 60?

It depends almost entirely on what you draw. In our simulation (5% growth, 2.5% inflation, full state pension from 67), drawing £25,000 a year in today's money the pot lasts past 100; at £30,000 it runs out at 95. Drop growth to 3% and £30,000 a year empties the pot by 85.

Do I get my state pension if I retire at 60?

No, retiring early does not bring it forward. State pension age is 67 for people reaching it from 2026 to 2028, so your pot must bridge the full seven years. The full new State Pension is £241.30 a week in 2026/27, about £12,548 a year, and needs 35 qualifying National Insurance years on a post-2016 record.

What income does the 4% rule give on £500k?

4% of £500,000 is £20,000 in year one, rising with inflation. That sits close to our engine's pot-only sustainable figure of about £20,500 on 5% growth and 2.5% inflation, though the 4% rule comes from US data and cautious UK planners often work nearer 3 to 3.5%.

Can I take 25% of my pension tax free at 60?

Usually you can take up to 25% of a defined contribution pot tax free once you can access it, and 60 is past the normal minimum access age. Withdrawals beyond the tax-free element are taxed as income. Our drawdown calculator works in gross income and does not model the tax, so budget on the net figure.

Is it worth buying missing National Insurance years before retiring at 60?

Often, yes. A voluntary Class 3 year costs £956.80 (2026/27) and each qualifying year adds 1/35 of the full new State Pension for life. Anyone retiring at 60 with gaps has seven years before the pension starts, so check your forecast and run the payback in our state pension top-up calculator.

Guidance and education, not regulated financial advice.