How Much Can You Safely Withdraw From £1m in the S&P 500 Over 20 Years?

Imagine you have £1 million, and you invest it in the S&P 500. The natural question is: how much can you safely withdraw each month for 20 years without running out of money?

The Short Answer

If the S&P 500 repeated its last 10 years, you could withdraw roughly £11,000–£12,500 per month for 20 years before exhausting the pot.

That depends on which historical return you use. This is purely mathematical, based on past averages - not a forecast or a promise.

The Maths in Plain English

We use the annuity formula with a fixed annual return r, monthly rate rm, and 240 months (20 years): Monthly withdrawal W = PV × rm ÷ [1 − (1 + rm)^−240]Where rm = (1 + r)^(1/12) − 1 and PV = £1,000,000.

Two credible sources for the last 10-year total return of the S&P 500 give different figures:- YCharts reports ~12.6% CAGR.- FinanceCharts (SPY) reports ~15.0% CAGR as of September 2025.

Plugging those into the formula gives:- At 12.6% CAGR: ~£10,900 per month.- At 15.0% CAGR: ~£12,450 per month.

If you adjust for inflation (say 3%), the real returns are lower:- 12.6% nominal ≈ 9.3% real → ~£8,940 per month in today’s pounds.- 15.0% nominal ≈ 11.6% real → ~£10,350 per month in today’s pounds.

Why You Shouldn’t Bet the House on This

- Markets are lumpy. Sequence risk means poor early years can sink an otherwise ‘safe’ plan. - Fees, taxes and withholdings reduce returns. - This assumes ending balance = £0 after 20 years. You may want capital left. - UK investors often use UCITS ETFs instead of US-domiciled funds due to PRIIPs rules.

Bottom Line

If you assume the S&P 500 repeats the last decade, £1m supports ~£11k–£12.5k a month nominal, or ~£9k–£10.3k in today’s money over 20 years. Sensible planning builds in buffers: cash reserves, bad-sequence modelling, fees, taxes, and annual reviews.

Disclaimer:

This is information and education only. It is not a personal recommendation. Investing involves risk. Capital is at risk. For regulated personal advice, you must work with an FCA-authorised adviser. Sources:

FinanceCharts – SPDR S&P 500 ETF (SPY) Performance 10-Year Average Annual Return (CAGR) https://www.financecharts.com/etfs/SPY/performance/total-return

YCharts – S&P 500 10-Year Return Total returns including dividends, updated regularly https://ycharts.com/indicators/sp_500_total_return_10_year

S&P Dow Jones Indices – S&P 500 Factsheet

Methodology, performance data, and official benchmark information https://www.spglobal.com/spdji/en/indices/equity/sp-500

SlickCharts – S&P 500 Historical Annual Returns Year-by-year performance history (price + dividends) https://www.slickcharts.com/sp500/returns

Alpesh Patel OBE www.campaignforamillion.com