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Image source: Getty Images<\/p>\n
A \u00a3250,000 ISA sounds like a major financial milestone. But when it comes to replacing a salary, the reality is far more sobering than it first appears.<\/p>\n
That\u2019s because retirement outcomes aren\u2019t determined by how a portfolio was built. They\u2019re determined by how much income it can sustainably provide once withdrawals begin.<\/p>\n
Sustainable income<\/p>\n
Once contributions stop, the maths becomes remarkably simple. A portfolio either supports a given level of inflation-adjusted<\/a> income, or it doesn\u2019t \u2013 regardless of how long it took to get there.<\/p>\n The chart below focuses only on this drawdown phase. It assumes a cautious long-term return of 4% a year and inflation of 2%, and runs the portfolio down to zero by age 85. This effectively stress-tests the maximum sustainable income over a 20-year retirement.<\/p>\n Chart generated by author<\/p>\n Under these assumptions, a \u00a3250,000 ISA can generate around \u00a310,000 a year, or roughly \u00a3833 per month, in real terms. That may cover some essentials or supplement other income, but it falls well short of replacing a typical salary.<\/p>\n Allowing for market volatility or longer life expectancy reduces sustainable income to around \u00a3750 per month, while leaving a residual balance of roughly \u00a357,000.<\/p>\n Inflation timing<\/p>\n Where investors often get confused is inflation. If you already hold the full \u00a3250,000 today, the starting capital is in place immediately, which supports income closer to \u00a315,000 a year, or about \u00a31,250 per month in today\u2019s money.<\/p>\n Crucially, this isn\u2019t a different withdrawal strategy. The sustainable income line in real terms is unchanged \u2013 having the capital today simply increases the equivalent income in today\u2019s money. Prior accumulation improves flexibility, but it doesn\u2019t change the underlying drawdown maths.<\/p>\n The message is clear: a \u00a3250,000 ISA is a solid foundation, but not life-changing on its own. Its real value lies in providing flexibility by supplementing pensions and spending, rather than fully replacing earned income.<\/p>\n A different way to look at Legal & General<\/p>\n When investors talk about income stocks, the focus is usually on yield. But with Legal & General (LSE: LGEN<\/a>), the more interesting question is why that income exists \u2013 and why it keeps showing up year after year.<\/p>\n![\"Chart](\"https:\/\/www.newsbeep.com\/il\/wp-content\/uploads\/2026\/01\/250k-dotted-1200x949.png\")
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