How the retirement projection works

Beyond Payday projects your retirement by simulating your entire financial life one month at a time, from today until your plan ends. Every account, contribution, tax, and withdrawal is recalculated for each of those months instead of being estimated with a single formula — that's how the projection can show you the month Social Security starts, when Medicare kicks in, or when your portfolio might run dry.

Payroll savings, employer match and extra savings stop at each person’s modeled life expectancy, even if their retirement age is later. Income start markers require a living recipient and a modeled benefit. A temporary Social Security earnings-test withholding does not move the claim milestone. Payroll SIMPLE IRA savings use their lower contribution limit and count toward the overall workplace-plan limit. A 457 allowance stays separate and does not reduce room for extra 401(k) contributions.

How it works

Current Income entries are grouped as earnings, Social Security, pensions, annuities, passive income and investment withdrawals. Ongoing benefits fill missing retirement assumptions for each owner; explicit retirement amounts or plans take precedence, including zero or empty plans. Current Social Security checks receive future COLA without an inferred past claim age or extra spousal top-up. Current pensions and annuities stay level and have no assumed survivor payment until a plan is entered. Retirement distributions stay funded by portfolio withdrawals, whose projected amounts follow spending rather than the current transfer schedule.

• Four buckets, one timeline. Your retirement savings — your "nest egg" — is split into four account types: Traditional (401(k)/IRA, taxed when you take money out), Roth (already taxed, grows tax-free), Taxable (brokerage and savings), and HSA (health savings). Each bucket grows on its own every month at the rate you set under How much your investments grow each year, tracked separately from today until your plan ends.

• Building up, before retirement. Until you retire, the projection adds your paycheck contributions — 401(k)/403(b)/457/TSP, IRA, Roth, HSA, and any employer match — every month, using limits for each projected tax year. Catch-up eligibility uses the age you reach by December 31 of that year. When limits for a projected year are not available, the latest known reference year is used; future IRS limits are not automatically inflated.

• Drawing down, after retirement. Once you retire, the projection covers your monthly spending in this order: your remaining active income, then Social Security, then pensions (adjusted yearly for cost of living), then annuities, then your HSA (for medical costs), then real-estate sale proceeds if you've downsized, and finally your investment accounts — taxable first, then Traditional, then Roth last. Taking money out of an account like this is called a withdrawal. This order is designed to leave your tax-free Roth money growing as long as possible.

• Required Minimum Distributions (RMDs). The IRS requires you to start withdrawing from Traditional accounts at a set age — 73 if you were born 1951–1959, or 75 if you were born in 1960 or later. The projection applies this automatically, using the IRS's official withdrawal-percentage table for your age. If an RMD is bigger than what you need that month, the extra is reinvested into your taxable account instead of sitting idle.

• Taxes. Each account type is taxed the way the IRS taxes it:

  • Traditional withdrawals (and RMDs) count as ordinary income and are taxed at your Share of retirement income paid in taxes (which you set yourself; 20% until you change it). Salary, pensions, annuities and business income use the same rate.
  • Roth withdrawals are tax-free.
  • Taxable (brokerage) withdrawals are taxed only on the gain, at a 15% long-term capital-gains rate. The part that's your original money comes back tax-free. Beyond Payday tracks the money you add during the projection as your cost basis; your starting balance is treated as all gain, since it doesn't know what you paid, so the estimate errs on the high side. A taxable gain on a home sale also uses the 15% rate.

  That rate is one flat rate instead of every IRS bracket — see Assumptions and limits below for what that means. Social Security itself is only partly taxable: the projection uses the IRS's formula, based on your "provisional income" (your other income plus half your Social Security benefit), to work out whether 0%, up to 50%, or up to 85% of your benefit is taxed.

• Pension lump sums. If a pension includes a one-time payout, you can enter the payout amount and the age you take it in that pension's Advanced Options, and choose whether it's taken instead of the monthly payments (no monthly or survivor payments are projected for that pension) or on top of them, like a DROP (Deferred Retirement Option Program) check. The projection adds it once, at that age: rolled into a tax-deferred account (taxed later as you withdraw it) or taken as cash (taxed as ordinary income in the payout year), whichever you choose.

• Life expectancy and survivor benefits. Each person has a Plan until age in the Retirement Age settings (default 95, up to 100). If one of you reaches theirs first, that person's pension stops at that age and the pension's survivor-benefit percentage (in its Advanced Options) keeps paying your spouse, with any cost-of-living raises carried over. Their Social Security stops too, and the surviving spouse keeps whichever benefit is higher — their own or the one that stopped. As at SSA, a survivor benefit started before the survivor's own survivor full retirement age (66 to 67, by birth year) is reduced, down to 71.5% at 60, and if the person who died had claimed early it's limited to the larger of what they were collecting or 82.5% of their full benefit. The projection ends when the last of you reaches the age you planned until. Annuities work the same way with their own survivor-benefit percentage: 0% (the default) means payments stop, like a single-life annuity, and a fixed-term annuity only pays the survivor for whatever is left of its term.

• Spending after a death. Once one spouse reaches the age you planned until, everyday spending — your bills and extra spending money — drops to the Spending if one of you passes away under Retirement Age (75% by default). Loan and debt payments, your mortgage, and property tax stay the same, since the survivor still owes them in full. Healthcare isn't scaled by the %: the late spouse's health insurance, Medicare, and long-term care costs simply stop.

• Default rates. If you haven't changed them, the projection uses a 4% growth rate and 3.5% general inflation. The 4% withdrawal rate has no setting on the Retirement page.

• Milestones. As the simulation runs, it logs the big moments in order — retirement, Social Security start, pension and annuity payments starting, a pension lump-sum payout, a life expectancy you've set, the Medicare transition at 65, age 59½ (penalty-free withdrawals), RMDs starting, loans paid off, long-term care starting, a home sale — so you can see exactly when each one lands on the chart.

• Your plan's health. After running the full timeline, Beyond Payday tells you in plain language whether your plan is on track. On Track means your savings are projected to last until your plan ends. At Risk means they're projected to run out between 90 and 94. Behind means between 80 and 89. Critical means before 80. The Plan summary appears before the income comparison table and includes an estimate qualifier: results are based on your plan settings and are not guaranteed. On a phone, that table shows one milestone at a time — choose it from the Milestone dropdown or step with the arrows to read each figure in full. Changes from a negative or small previous amount (under $100), or to a negative amount, show dollars only because a percentage can be misleading.

When does a debt payment stop?

The projection never assumes you'll pay a debt off faster than your records show. Each debt with a payment bill appears in Debt payments in your plan, below the income table, with one sentence saying what's assumed.

These dates are conservative. The Debt Payoff Planner (opens in a new tab) estimates from today's balances and entered payments, so it can show an earlier payoff date than the retirement plan.

• Loans with an end date (a maturity date, or a start date and term) stop at that end date. If you've added a balance from the last 120 days, it's checked against the loan's schedule. When it's well above the schedule, the payment is assumed to run longer: the months left are worked out from that balance at the loan's scheduled payment, and the payoff only ever moves later, never earlier. Checking needs the loan's original amount, length and start date; without them the row links to Edit loan details. A loan whose end date has already passed is left out of the plan, and its row says so if its payment bill is still on.
• Credit cards and debts with no end date keep their payment in the plan until your balance history proves the balance is going down: at least 3 balances spanning 90 days, the newest within the last 120 days. Then the payment stops at whichever comes later: when your payment would pay it off (with interest), or when the balance reaches zero at its real pace. A balance that's flat or going up, or a payment too small to cover the interest, keeps the payment going.
• Only the payment stops. On a card, only its extra payment bill ends; an annual fee or other charges keep going. A card paid in full each month has no payment to stop.

Add past balances from the link on each row, or from the debt's balance history on Debts (opens in a new tab). The home equity and remaining mortgage figures for a home sale still follow the loan's original schedule.

Retirement, Social Security, pension and annuity starts, survivor changes and healthcare use calendar age at each monthly point, which falls on the 15th. A birthday after the 15th first appears in the following month. An explicitly chosen retirement month takes precedence. Growth and inflation still use their existing rates.

Income dates and contributions

Current ages, the time until retirement, income and contribution previews, and the projection’s starting date use your saved account time zone when available, otherwise your browser’s. Home and mortgage previews use that same day. These figures refresh when that calendar day changes.

Recurring income counts only within its saved start and end dates, for you and your spouse. One-time entries and income assigned to other household members do not become ongoing retirement income. Payroll contributions and employer matches follow the same dates, including savings built up before the detailed forecast begins. Each person’s selected retirement month controls when their work income and payroll contributions stop.

Healthcare and care for each person

Health insurance, Medicare and long-term care estimates are added to your included bills. In Healthcare, open Match existing bills and choose which estimate already includes a bill. That bill is left out only while the matching estimate is charged. Unmatched bills continue, including other medical expenses. If a bill should stop permanently, set its end date in Bills.

Under Plan for long-term care, choose whether each person needs care, their monthly cost, the age care starts and the number of years. Existing plans keep care ending at age 95 until you enter a duration. A zero duration models no care. Calendar birthdays at each monthly snapshot determine when care starts and ends. Medicare, matched bills and spending reductions use the same calendar ages. Healthcare costs and milestones stop at the person’s planned life expectancy.

Care replaces meals and some household spending controls reductions to food, transportation and similar costs. Turn it off for care at home that adds to your usual spending. Housing costs remain unchanged while someone still lives at home; mortgage and other loan payments continue until their modeled payoff. These settings also appear in Guided setup. Use our suggestion resets the care assumptions, including care inflation.

An example with real numbers

Say you're 60 with $500,000 in a Traditional 401(k), planning to retire at 65 with a $2,500/month Social Security benefit starting at 67. Between 60 and 65, the projection keeps adding your contributions and growing your balance at the rate you set. At 65, it stops counting your paycheck and starts covering your bills from your accounts instead. From 65 to 67 — before Social Security starts — it draws from your Taxable account, then your Traditional account, to cover the gap. Once Social Security begins at 67, it covers part of your spending, so less comes out of your portfolio each month. At 73, Required Minimum Distributions kick in automatically, whether or not you need the money that month. The chart shows this whole story as one continuous line from today through age 95.

Assumptions and limits

• Taxes are a flat rate, not brackets. The Share of retirement income paid in taxes setting is one blended percentage, not a simulation of actual federal and state tax brackets. Investment gains always use 15%, though the real rate can be 0% at low incomes or 20% at very high ones, plus state tax. It's a reasonable approximation for long-range projections, but your real tax bill in any given year could be higher or lower.
• The Dashboard uses steady growth. It runs the same month-by-month engine as Retirement's Quick Estimate. Stress Test and Deep Analysis vary market returns and follow one sample future (ending balance closest to the median), with the Balance chart showing the full range, so milestone amounts can differ from the Dashboard. Beth's tools use simpler estimates; use the Retirement page to inspect the detailed projection.
• One home sale. The projection models selling or downsizing your primary home once — it doesn't model buying and selling multiple properties.
• One steady growth rate per account, not year-to-year market swings — unless you turn on Monte Carlo simulation mode, which models up to 10,000 randomized market paths instead. See Run a Monte Carlo simulation.
• US federal rules only. State-specific tax quirks aren't modeled individually — they're folded into your single Share of retirement income paid in taxes.

Guided setup asks about most of these settings in plain language, one step at a time — see Set up your retirement plan with guided setup.