1. Timeline
The model uses your current age, selected retirement age and planning age. Retirement spending and income cash flows between retirement and the planning age are modelled monthly. Pre-retirement retirement contributions are modelled at the selected Retirement contribution frequency.
2. Expense modelling
In Quick Estimate, the planner applies your selected retirement-spending percentage to today's monthly expense and then inflates it over time using one inflation assumption.
Quick and Detailed results are not expected to match. Detailed Planner creates a different set of future cash flows because each category can use a different inflation rate, retirement rule, lifestyle phase, income offset or one-time goal.
In Detailed Planner, each expense can use one of four rules:
- Continue: the expense remains through the plan.
- End at age: the expense is included until the chosen age and then becomes zero.
- Change at retirement: the expense is multiplied by the percentage you specify once retirement begins.
- Start at retirement: the expense begins only once retirement starts.
Categories can be assigned to general, healthcare, lifestyle or education inflation. Those inflation rates are user-entered assumptions.
For expenses tagged Lifestyle, the retirement percentage set on the expense and the applicable retirement lifestyle-phase percentage are multiplied together. For example, a 100% Travel setting with a 110% first-decade lifestyle phase produces 110% of today's Travel budget in today's purchasing power before inflation.
3. Inflation
Amounts entered in Detailed Planner are treated as today's money in the selected currency. For a cash flow occurring in a future month, the model compounds the relevant annual inflation rate from the current age to that month.
Different categories can therefore grow at different assumed rates.
4. Retirement income
Pension, rental income and annuity income can begin at a chosen age. The amount entered is treated as the monthly amount when that income starts, then grows using the annual increase you specify. Retirement income reduces the amount that must be withdrawn from the investment portfolio.
5. One-time retirement goals
One-time goals are entered in today's money, assigned to an age and inflated to that point in time. Examples include a vehicle replacement, renovation, family support or a medical reserve.
6. Required retirement amount
The planner builds the net monthly cash flow after retirement:
Each future monthly withdrawal and one-time goal is discounted back to the retirement date using the post-retirement return assumption. The present values are added together, then the selected safety buffer is applied.
7. Projected assets at retirement
Existing retirement savings are compounded using the pre-retirement return assumption. Current retirement contributions are projected at the selected Retirement contribution frequency using the periodic rate implied by the entered annual pre-retirement return. The model compares those projected assets with the required retirement amount. Pay frequency is informational unless the user links Retirement contribution frequency to it using “Same as my pay cycle”.
8. Funding gap and recurring retirement contribution
If projected assets are below the required retirement amount, the difference is the funding gap. The planner estimates the total recurring retirement contribution required from today at the selected Retirement contribution frequency, under the entered constant return assumption, to reach the modelled target. The additional contribution subtracts the recurring contribution you already entered at that same frequency.
9. Portfolio paths
The planner shows two deterministic retirement portfolio paths. The target-funded path starts with the full modelled corpus, including the selected safety buffer. If some of that reserve is not needed for spending, it remains invested and may continue to grow, so the path does not necessarily finish at zero at the planning age.
The current-plan path starts with the retirement corpus projected from the savings and recurring retirement contributions you entered. If that path reaches zero before the selected planning age, the chart marks the modelled depletion age. Both paths subtract monthly net withdrawals and goals and apply the entered post-retirement return. They are deterministic illustrations and do not simulate market volatility or sequence-of-returns risk.
10. Important limitations
- Returns and inflation are assumed rather than predicted.
- The model does not automatically calculate taxes, investment fees or product-specific rules.
- Healthcare and longevity can differ materially from assumptions.
- Market returns do not occur smoothly each month in real life.
- Results can change substantially when assumptions change.
For consequential financial decisions, consider reviewing the assumptions with an appropriately qualified financial, tax or legal professional.
Build a plan around your own assumptions.
Use Quick Estimate for speed or Detailed Planner to model expenses that end, rise or change after retirement.