How pension drawdown works in the Netherlands
Dutch retirement income has three layers. The AOW is the flat state pension everyone who has lived or worked here builds up. On top sits your occupational pension (the second pillar, through your employer's fund), and many people add a lijfrente annuity or banksparen product (the third pillar). Historically most second-pillar pensions paid a guaranteed income for life, so there was little to "draw down." That is changing: under the Wet toekomst pensioenen the whole system is moving to defined-contribution pots by 2028, so more retirees now hold a capital sum and must decide how fast to draw it. This planner models that decision — how long your pot or lijfrente lasts alongside your AOW. Note that payout products have their own rules (a lijfrente, for example, must pay out over a minimum number of years), so treat this as a sustainability guide rather than a product quote.
The AOW state pension
The AOW is a flat, residence-based state pension paid by the SVB. In 2026 the full amount is about €1,637 a month gross for a single person (roughly €19,650 a year), or about €1,122 each for a couple, plus holiday allowance in May. The AOW age is 67 in 2026 and 2027. You build up 2% of the full pension for each year you live or work in the Netherlands between age 15 and AOW age, so time spent abroad reduces it. The AOW is taxable, but because it sits in the low first bracket and the tax credits are large, a retiree on AOW alone usually pays no tax.
How retirement income is taxed
Your pension drawdown, lijfrente and AOW are taxed together in box 1. The big advantage of reaching AOW age is that you no longer pay the AOW premium, so the first-bracket rate drops to 17.85% in 2026 (versus 35.75% for working-age people). Above €38,883 the rate is 37.56%, and above €78,426 it is 49.50%. Two credits then reduce the tax directly: the general tax credit (up to €1,556 at AOW age) and the ouderenkorting elderly credit (up to €2,067, tapering above €46,002). Together they make roughly the first €20,000 of income effectively tax-free. Money inside your pension or lijfrente is also exempt from box 3 wealth tax while it grows — only the income you draw is taxed.
Sustainable drawdown
The well-known "4% rule" came from US research (Bengen, 1994) and assumes a 30-year horizon. In the Netherlands, with the AOW providing a guaranteed inflation-linked base, your own pot only has to bridge the gap to your target income — so the sustainable withdrawal rate from the pot depends heavily on how big that gap is. The main risks are drawing too fast early on (sequence risk) and living longer than you planned. A lower drawdown leaves more capital and more flexibility later; a higher one runs the pot down faster. Because returns and inflation matter so much, adjust the assumptions in the panel to your own situation.
Frequently asked questions
How long will a €300,000 pension pot last?
It depends on your drawdown, returns, fees and your AOW. Alongside a full single AOW (~€19,650/yr), a €300,000 pot drawn at 4% adds about €12,000 before tax. Use the planner above to model your own numbers.
Is pension income taxed in the Netherlands?
Yes — pension, lijfrente and AOW are taxed together in box 1. From AOW age the first-bracket rate is only 17.85% (no AOW premium), and the general and elderly tax credits make roughly the first €20,000 effectively tax-free.
Do I pay box 3 wealth tax on my pension pot?
No. Money inside a pension or qualifying lijfrente is exempt from box 3 while it grows — only the income you draw is taxed, in box 1. Savings and investments held outside a pension wrapper are subject to box 3.
How much AOW will I get in 2026?
About €1,637/month gross for a single person (~€19,650/yr), or about €1,122 each for a couple. The AOW age is 67. You build up 2% for each year you live or work in the Netherlands between 15 and AOW age.
Assumptions & methodology
The model runs your pension pot year by year to your plan-to age. Each year the target net income rises with inflation; the AOW (if included) is uplifted the same way as a CPI proxy. The pension drawdown, AOW and any other income are taxed together in box 1 using the 2026 AOW-age rates (17.85% / 37.56% / 49.50%), with the general tax credit (€1,556, tapering from €29,736) and the ouderenkorting (€2,067, tapering 15% from €46,002) applied. We do not model the alleenstaandeouderenkorting, box 3 wealth tax, fiscal-partner splitting, or the minimum-duration rules of specific lijfrente or pension-payout products. Figures use 2026 rates and are illustrations only. Always check current figures at belastingdienst.nl and svb.nl.