Retirement spending capacity

What the curve is

For every retirement age on the x-axis the model solves for the single constant, inflation-adjusted, after-tax amount you could spend every year from that age until the plan ends, leaving the portfolio at exactly zero. It re-solves from scratch for each age — the curve is a set of independent scenarios, not one path.

Net / gross and annual / monthly

The two switches beside the headline change how every spending figure on the page is quoted — the headline, the tiles, the chart, the tooltip and the table all follow them. Neither one re-runs the model.

• Net is what lands in your pocket: the amount the model actually solves for. Gross is what it takes before tax to leave you that much — the same plan, with its average annual retirement tax bill added back. Each level shown has its own gross figure, traced at that spending level, because tax is progressive and the gross-up is not a fixed percentage.
• The two lines on the chart are the median in whichever basis you picked (solid) and the same median in the other basis (dashed), so both are always visible and the switch just decides which one leads.
• Monthly divides by twelve. Only per-year spending follows it — the portfolio balance, the lifetime tax total and the first-year withdrawal are a stock and a couple of totals, so they stay as they are.
• The Spending today reference line follows the switches too. Its gross figure is your pay less what you save, which is exactly the take-home line plus the income and payroll tax computed on it.

Before you retire (accumulation)

• Household spending is held at today's take-home level — gross pay, less the income tax computed on it and 7.65% payroll tax (Social Security up to its wage base, plus Medicare), less what you save — growing with real wage growth.
• Savings are split into pre-tax, Roth and taxable by the percentages you set. Pre-tax contributions are deducted from taxable income; the rest is taxed on the way in.
• Anything left over after spending — salary, and any pension or Social Security that has already begun — lands in the taxable account. So a spouse who retires early automatically reduces contributions by the right amount, and a spouse who keeps working after you retire keeps saving at their own rate.

After you retire (drawdown)

• Every year the model solves for the withdrawal that leaves exactly the spending you need after tax, given the pensions, Social Security and any salary already coming in.
• Withdrawals come out taxable first, then tax-deferred, then Roth. A taxable withdrawal realises long-term gain in proportion to the unrealised share of that account; a tax-deferred one is ordinary income; a Roth one is untaxed.
• Spending is scaled by the go-go / slow-go / no-go multipliers, keyed to your age — or, once you have died, to the survivor's.
• The health bridge is added per person from their retirement age until 65; one-off expenses are added in the year matching your age.
• After one plan-end age passes, spending drops to the survivor percentage, each survivor annuity kicks in at the rate that person elected, Social Security becomes the higher of the two benefits, and the pre-tax account's RMDs follow the survivor's age.

Pensions, and FERS in particular

• Both people get the same pension section, so a household of two federal employees is not a special case: each carries their own service, accrual, COLA rule, survivor election and supplement. Tick Federal employee for whoever it applies to; leave it off and the section is an ordinary private pension with whatever COLA you choose.
• You can either enter the annuity — the figure you already have from a benefits estimate, anchored to the age it assumed — or have it computed from high-3 × service. In the first case the model walks the credit curve away from your reference age, so working longer or leaving earlier is priced correctly without overwriting the number you typed. High-3 is the average of the last three years of pay.
• Regular FERS earns the accrual rate you set — 1.0% by default — per year of service, and the whole annuity is lifted to 1.1× automatically if that person retires at 62 or later with at least 20 years in. A regular FERS annuity also takes no COLA until 62: the model holds it flat in nominal terms until then, which in today's dollars means it loses ground to inflation for those years.
• FERS Special provisions — law enforcement officers, firefighters, air traffic controllers and CBP officers — earn 1.7% of high-3 for the first 20 years of covered service and 1.0% for every year after, take COLAs from the first payment rather than waiting until 62, and draw the annuity supplement at whatever age they retire. The model does not enforce the mandatory separation at 57, so it will happily quote you ages past it.
• An annuity whose start age is later than the retirement age is treated as deferred: its dollar amount is fixed when that person leaves, so in today's dollars it loses ground to inflation for every year it waits — and, under regular FERS, until 62.
• The annuity supplement runs from retirement to 62, carries no COLA, and needs an immediate unreduced retirement — age 57 or later under regular FERS, any qualifying age under the special provisions — with the annuity starting that same year. It is a bridge to Social Security, so it stops at 62 whether or not the benefit is claimed then.
• A survivor election reduces the annuity by 5% or 10% while both are alive. Under FERS the survivor then gets 25% or 50% of the unreduced annuity, and if the spouse dies first the reduction is dropped and the full annuity restored. A private pension pays the share of the reduced amount and keeps the reduction. Each person elects separately.

Taxes

• Brackets applies the 2025 federal ordinary-income brackets and standard deduction (plus the 65+ addition per person), stacks long-term gains on top of ordinary taxable income through the 0/15/20 ladder, and runs the two-tier provisional-income test that makes up to 85% of Social Security taxable.
• Filing status is married-filing-jointly while both are alive and switches to single once one plan-end age passes — the widow's penalty, which the model applies to the survivor automatically.
• Required minimum distributions start at 73 or 75 depending on your birth year and are taken off the Uniform Lifetime Table. They are forced out of the tax-deferred account whether or not the money is needed; what is not spent moves to the taxable account.
• Brackets and the standard deduction are inflation-indexed, so holding them fixed in today's dollars is correct. The Social Security thresholds are not indexed — they have been $32k/$44k since 1993 — so the model erodes them in real terms and more of your benefit becomes taxable over time.
• State tax is a flat rate on the same income, optionally exempting Social Security and pensions. One blended effective rate is the alternative mode: every gross dollar taxed alike, all three accounts pooled, no RMDs.

Returns and the odds

• Baseline uses the fixed return you entered — pre-retirement rate while working, retirement rate after — converted to real via (1+r)/(1+i) − 1.
• Monte Carlo draws a normal return each year with the same means and your volatility — the working figure before retirement, the retired one after — then solves the same problem on every path. The same random draws are reused across every retirement age, so the curve is smooth and comparisons across ages are apples-to-apples.
• Because the spending plan is a fixed path rather than a decision that adapts, a path supports a spending level exactly when that level is at or below the most that path could sustain. So the percentiles are success rates: the level that 90% of paths support is the level with a 90% success rate, and the highlighted figure follows whatever target you set.
• The median normally lands below the baseline even though both use the same average return. That gap is volatility drag — a bad year costs a portfolio more than an equally good year gives back — and it is the honest cost of uncertainty, not an error. Set σ to 0 and the two lines coincide.

Known simplifications

• No IRMAA surcharges, no net investment income tax, no AMT, and no capital-loss harvesting. Dividends and interest in the taxable account are not taxed annually — only realised gains on withdrawal.
• State tax is one flat rate with one optional exemption; it has no brackets or deductions of its own beyond borrowing the federal standard deduction.
• The withdrawal order is fixed. There are no Roth conversions, and no attempt to fill low brackets in the gap years between retiring and claiming Social Security — a real plan would usually beat this one on tax.
• All three accounts earn the same return; there is no asset location or glide path.
• Service is treated as one unbroken run at a single accrual rate — no part-time proration, no unused sick leave, no military buyback, and no mix of special and regular service in one career. High-3 is approximated by the last three years of pay.
• The MRA+10 age reduction, the earnings test on the supplement, FEHB and FEGLI premiums, and the FERS contribution itself (which is already inside the savings figure) are all left out. A deferred annuity is modelled only as a later start age.
• The pre-tax account is one household pool. Its RMDs follow your age while you are alive and the survivor's after, rather than splitting into two accounts on two schedules. The 0.9% additional Medicare tax on high wages is left out.
• Plan-end ages are fixed, not drawn from mortality tables. Set them apart to model a survivor period.
• No long-term-care shock, no home equity, no annuity purchase, no Social Security spousal top-up.