Can I retire at 55 with £500,000?
£500,000 sounds like a lot until you ask it to fund 40 years. We ran the same pot through 1,000 simulated markets at four different spending levels to find where it holds up and where it breaks.
The setup
A 55-year-old stops work today with £500,000 invested and no further contributions. They want to spend a fixed amount each year in today's money for 40 years, to age 95. From 67 the new State Pension pays roughly £11,500 a year, which reduces what the portfolio has to find.
Assumptions used
- Age today / retiring at / plan to
- 55 / 55 / 95
- Starting portfolio
- £500,000
- Annual contributions until retirement
- £0
- Retirement spending from the portfolio
- £25,000 a year, today's money
- Guaranteed income
- £11,500 a year from age 67
- Expected return / inflation / volatility
- 6% / 2.5% / 13%
- Simulation
- 1,000 runs, returns drawn at random each year
- State Pension is assumed at the full new-State-Pension rate and to rise with inflation.
- The normal minimum pension age rises to 57 from April 2028 — if that applies to you, model 57.
Taxes, platform charges and changes in spending through retirement are not modelled. Figures are illustrations produced by the Retiris model, not predictions.
What the model shows
| Scenario | Runs that lasted | Median years funded | Typical shortfall age | Steady projection |
|---|---|---|---|---|
| £25,000 a year | 57% | 40 | 83 | £306,757 left at 95 |
| £30,000 a year | 31% | 28 | 78 | Runs out at 89 |
| £35,000 a year | 13% | 20 | 74 | Runs out at 78 |
| £25,000, no State Pension | 24% | 27 | 79 | Runs out at 86 |
Middle of simulated outcomes, in today's money
Reading the results
Three things stand out. First, none of these versions is comfortable: a 40-year retirement funded entirely by £500,000 is demanding even at modest spending, and the odds fall away steeply as spending rises. Second, the twelve years before the State Pension do most of the damage — the portfolio is funding 100% of spending during exactly the period when a bad sequence of returns hurts most. Third, removing the State Pension is about as damaging as adding £10,000 a year to spending, which is a useful way to value a guaranteed income.
The bridge years, 55 to 67
This is the part most people underestimate. Withdrawing £25,000 a year from £500,000 is a 5% starting withdrawal rate — well above the 4% rule of thumb, and the rule of thumb was built for a 30-year retirement, not 40. The plan only works because the State Pension arrives and cuts the portfolio's job by nearly half from 67.
Practical implications: check your State Pension forecast before relying on it, keep two to three years of spending in cash or short bonds so you are not forced to sell equities into a fall, and treat the bridge years as the period where flexibility matters most.
Change the numbers
The most useful thing you can do with this page is replace our spending figure with yours.
Try your own version
Everything else stays as set out in the assumptions above.
In this model, under these assumptions. Not advice, and not a forecast.
What would make this plan safer
- Work two more years. Two years of contributions plus two fewer years of withdrawals typically moves the success rate more than a percentage point of extra return.
- Cut spending in bad years. A plan that trims 10% after a fall behaves far better than the fixed-spending plan modelled here.
- Fill State Pension gaps. Voluntary National Insurance contributions can be the highest-return money in the whole plan.
- Reduce volatility near the start. Same average return, lower spread, materially better odds.
Frequently asked questions
Is £500,000 enough to retire at 55 in the UK?▾
In this model £500,000 supporting £25,000 a year lasted the full 40 years in a little over half of simulated markets — a plan that works, but with no slack. At £30,000 a year it lasted in under a third, and at £35,000 in around one run in eight. The deciding factors are your spending, whether you will get a full State Pension, and how much market volatility you carry in the first decade.
How much income does £500,000 give you at 55?▾
A 4% starting withdrawal is £20,000 a year, but retiring at 55 stretches the horizon to 40 years rather than 30, which argues for closer to 3.25%–3.5% — about £16,000 to £17,500 a year from the portfolio until other income begins.
Can I access a pension at 55?▾
The normal minimum pension age is 55, but it rises to 57 from 6 April 2028 for most people. If you turn 55 after that date, plan on 57 unless your scheme has a protected pension age.
Does the State Pension change the answer much?▾
Substantially. In the runs above, removing the State Pension from age 67 cuts the success rate sharply, because the portfolio then has to fund the full £25,000 for another 28 years rather than roughly £13,500.
What about tax and charges?▾
Neither is modelled. Enter spending as the gross amount you need to withdraw, and subtract platform and fund charges from the expected return — 0.4% of charges means using 5.6% instead of 6%.
Sources
- GOV.UK — The new State Pension
- GOV.UK — Personal pensions: when you can take your pension
- MoneyHelper — Taking your pension
Modelled figures on this page were produced with the Retiris retirement model, described in full on how the model works. They are illustrations of hypothetical scenarios, not research findings about real households.
Retiris publishes educational planning tools and analysis. Nothing on this page is personalised financial advice, and modelled scenarios are illustrations rather than predictions. See our editorial methodology and disclaimer.