The guide to Retirement Spending Planner

Retirement spending: what your nest egg may need to fund

Once you are retired, the question shifts from building a nest egg to using it. The Retirement Spending Planner starts with your portfolio today and shows how spending and income could shape the years ahead.

Open the Retirement Spending Planner

The idea behind itStart with the money you have and show what must come out of it.

What this planner does

Enter your age, current nest egg, and planning age. Choose an assumed return and an initial annual investment spending rate. You can include Social Security, extra income, optional monthly contributions, and mortgage principal-and-interest payments through a selected payoff age.

The model grows the portfolio monthly, adds any contributions, and subtracts the required draw. If the portfolio reaches zero, the graph marks the timing and the balance stays at zero. A balance remaining at the horizon means this scenario reaches that age with money left; it does not guarantee the real outcome.

The philosophy: show the funding gap

A spending budget and a portfolio withdrawal are different amounts. Social Security can fund part of the budget. Extra income can expand what is available to spend. A mortgage can create an additional draw that ends at a known age.

Making those relationships visible is more useful than treating every dollar of spending as a dollar taken from investments. It also helps you see why a change in one income source may affect the graph differently from a change in lifestyle spending.

An example of the income breakdown

A $1,000,000 nest egg with a 4% initial spending rate sets $40,000 of base annual spending. With $24,000 of Social Security and no mortgage, the portfolio draw is $16,000. If you also enter $6,000 of annual extra income, displayed spending capacity becomes $46,000. That extra income already funds the expanded budget; it is not deducted from the $16,000 again.

If mortgage principal and interest add $12,000 a year, the draw becomes $28,000 until the selected payoff age. Property taxes, insurance, and escrow are outside that mortgage input.

Read the two cushions carefully

Growth cushion compares the next modeled year of investment gains with that year's planned portfolio withdrawals. A positive amount means projected growth exceeds the draw for that year. It does not establish that future years are covered.

Extra spending room asks how much annual lifestyle spending could change from the selected age through the planning horizon without a modeled funding gap. It can consume principal. A negative amount means the scenario needs a spending reduction. Neither card invents a year beyond the horizon.

Compare assumptions that matter

Start with zero contributions and a non-zero nest egg. Compare a 0% return with your chosen positive return. Then enable spending inflation, adjust the Social Security start age, and test a mortgage payoff date. Change one assumption at a time so you can see its effect.

Extra-income inflation is separate from spending inflation. Social Security uses a fixed illustrative 2.5% annual increase. Taxes, fees, market volatility, required distributions, and detailed health-care costs are not modeled. For the saving years before retirement, use the Retirement Planner guide.

Further reading: How Social Security cost-of-living adjustments work.

Try it with your own numbers

Change one assumption, compare the result, then try another. Calculator settings stay in your browser.