What pension pot do you need to retire on £25,000 a year (take-home)?

£25,000 net is a budget number, not a pot number

Maybe you have seen £25,000 as a modest retirement income and wondered what pot you need to make it real. Not gross. Not "around thirty with tax to sort later." Twenty-five thousand in your bank after tax, every year.

Multiply by 25 and you get £625,000. Plenty of articles stop there. UK planning is messier: tax on withdrawals, state pension from 68, and whether the pot lasts through your eighties, not just whether you hit a number at 65.

This walkthrough uses the caniretire.uk calculator with a concrete situation: retire at 65, plan to 90, £25,000/year take-home (rising with inflation), phased 25% tax-free withdrawals, and the full new state pension from 68. Growth is 1% above inflation (4% nominal at 3% inflation). Tax rules follow 2025/26.

£25,000 net is what you spend. The pot you need is what is left after tax, state pension, and twenty-five years of drawdown maths.

The headline answer

For this scenario, you need about £433,000 in your pension pot at age 65 to sustain £25,000/year net through age 90.

That is not a guess from a spreadsheet formula. It is the minimum pot where the calculator's projection shows funds last until age 90+ at your target draw. That is the same test the sustainable net income strip uses internally.

What £25,000 net actually costs from the pot

The calculator does not withdraw £25,000 gross. In year one, before state pension, it solves for the gross pension draw that delivers £25,000 take-home after tax, using phased tax-free treatment (25% of each withdrawal tax-free).

For this scenario, year-one figures are:

• Gross draw from pot: about £26,500
• Tax paid: about £1,450
• Net from pot: £25,000

That is why planning in net matters. Your budget is £25,000. Your pot sees a higher gross outflow. The income slider's tax-band markers show you are still in basic rate. The gap between gross and net is real, and it compounds over 25 years of drawdown.

Lifetime tax across the plan is about £103,000, roughly 10% effective on total income from the pot and state pension combined. Meaningful at this income level, even if it is not the main story.

Why state pension changes the pot you need

From age 68, the full new state pension (modelled at £12,548/year gross) counts toward your £25,000 net target. You need less from the pot in those years. That lower draw compounds into a much smaller starting pot requirement.

Turn state pension off while keeping everything else the same, and the minimum pot at 65 jumps to about £585,000, roughly £152,000 more.

The bridge years from 65 to 67 hurt. You need the full £25,000 net from the pot alone. No state pension yet. If you are retiring before state pension age, model those years explicitly. Do not average them away.

What if you are not retiring today?

The £433k figure assumes you are at retirement with that pot. If you are 40 today with £40,000 saved and contributing £8,000 a year (gross credited to the pot, including employer and tax relief), the calculator projects about £440,000 at 65. That leaves enough margin for this plan.

Your numbers will differ. Enter your actual pot and contribution total in Adding each year. The hint explains that this should be the full amount credited, not just your payslip deduction.

When the pot is not quite enough

Drop the pot to £368,000 at 65, about 15% below the minimum, and the same £25,000 net target runs out around age 86, not 90.

The sustainable net income strip below the target slider would flag this as above sustainable and offer an Apply button to reset to the maximum the pot can support.

Assumptions in this case study

These are the inputs behind the scenarios linked above. Change any of them in the calculator or Assumptions panel, then use Share results to save your version.

This is a worked model, not personal advice. For your own circumstances, verify inputs and speak to an FCA-authorised adviser before making decisions.

caniretire.uk is an educational tool, not regulated financial advice. Tax rules and investment returns change; always verify figures with an FCA-authorised adviser before making decisions.