Methods
How the projection actually works, year by year — in plain language, so you can check it against your own numbers rather than take it on faith. For the shorter version inside the tool itself, see the Assumptions card; for account-specific questions after you own it, see Support.
Why year-by-year, not a snapshot
Most "net worth calculators" apply one growth rate to today's number and call it done. That answers a different question than the one that actually matters: not what will my balance be, but will it last as long as I need it to, given how I actually spend, when I actually retire, and how the tax code actually treats each of those years.
So the engine builds a row for every single year of your plan — from today through the end of a chosen life expectancy — and recomputes income, taxes, spending, withdrawals, and growth fresh each year, the same way your real finances actually unfold. Everything below describes what happens inside each of those rows.
Federal, state & local taxes
Brackets that move with the years, not frozen in place
Federal bracket thresholds, the standard deduction, and IRMAA tiers all start from their current statutory values and inflate forward every year of your plan at the inflation rate you set — not a single year's tax code copy-pasted forward to 2050. Where a provision is genuinely temporary under current law, the tool holds it to its real window instead of inflating it: the OBBBA senior bonus deduction keeps its actual 2025–2028 amounts and correctly disappears in 2029, rather than being treated as permanent.
State tax is modeled as a flat rate you enter — this tool doesn't attempt to replicate any state's own bracket structure, since that's a much larger and more volatile surface to keep current. A separate field covers local/municipal income tax if your area has one. Self-employment tax is calculated on business income directly, following the standard 92.35%-of-net-earnings base and combined Social Security/Medicare rate structure, including the additional Medicare tax above the wage-base threshold.
Qualified tips and overtime pay get their own deduction, modeled with the income phase-out and dollar caps in current law. Pension income taxability is a percentage you set per pension, since it depends on details (contribution basis, plan type) the tool can't infer on its own.
Social Security
Benefits are estimated from either a simplified wage-history calculation or, more accurately, an amount you enter directly from your own Social Security statement — we'd always recommend the latter once you have it. Claiming age adjusts the benefit using the standard early/delayed retirement factors. The taxable portion of Social Security benefits is calculated each year using the actual provisional-income formula (the 50%/85% thresholds based on combined income), not a flat assumption — so it correctly shifts as your other income changes from year to year, including in years a Roth conversion pushes more of your benefit into taxable territory.
If you or your spouse spent part of your career in non-covered government employment (where Social Security tax wasn't withheld), a separate toggle lets you model that exemption instead of forcing every dollar of wages through the standard calculation.
Roth conversions
Rather than a flat dollar amount, conversions are sized to a target you choose — for example, "fill up the 22% bracket" — and solved for simultaneously against three moving thresholds at once: the ordinary-income bracket ceiling, an IRMAA tier you select two years ahead (since IRMAA surcharges are based on income from two years prior), and the senior-deduction phase-out, if you've opted to protect it. Getting this right requires iterating, since converting more can itself push Social Security into being more taxable and can trigger capital-gains recognition that further changes the picture — so the sizing calculation accounts for those feedback effects rather than solving each threshold in isolation.
A separate field models the SSA-44 exception: a life-changing event (like retirement itself) that lets you use an income estimate rather than your two-years-prior tax return for IRMAA purposes, including in the year of a spouse's death.
Medicare & IRMAA
Before 65, health coverage is your own responsibility — often the detail that decides whether early retirement is actually possible — so premiums are modeled explicitly and escalate at their own rate, separate from general inflation, with published benchmark defaults if you don't have your own figure yet. Coverage switches automatically to Medicare at 65, with a choice of traditional Medicare + Medigap or Medicare Advantage, and IRMAA surcharges layered on top based on the two-years-prior income lookback, using current CMS threshold and surcharge figures projected forward with inflation the same way the tax brackets are.
Required minimum distributions
Once you reach the applicable RMD age, the tool calculates the required withdrawal from tax-deferred accounts (401(k)/IRA and any inherited retirement account) using the IRS Uniform Lifetime Table each year, and forces that withdrawal into your taxable income whether or not you actually need the cash for spending — exactly as the real rule works. Inherited retirement accounts follow the 10-year rule where applicable, rather than being treated identically to your own accounts.
Capital gains
Long-term capital gains aren't taxed as a flat percentage — they're stacked on top of your ordinary income and taxed at the 0%/15%/20% long-term rates based on where that income lands you in the bracket structure, which is how the real tax code treats them. That means the same dollar of gains can be tax-free in a low-income year and taxed at 15% in a year a large Roth conversion or RMD has pushed your ordinary income higher — the tool reflects that interaction rather than applying one blended rate.
Account growth & withdrawal order
Every account type — 401(k)/IRA, Roth, Brokerage/Liquid, Crypto, HSA, Cash Balance Pension — carries its own expected return, and its own volatility if you're running Monte Carlo, rather than one blended portfolio return applied everywhere. A de-risking glidepath lets returns and volatility shift lower starting in a year you choose, modeling the common practice of reducing risk as retirement approaches. Brokerage/Liquid balances also track a cash allocation and dividend yield, generating interest and dividend income (and the capital gains tax that comes with selling appreciated shares) as part of that account's own mechanics rather than as a separate flat assumption.
When your plan needs cash beyond what income alone covers, withdrawals are drawn from accounts in a fixed, sensible order, and — where you've opted in — sourcing is IRMAA-aware, meaning the tool prefers not to trigger a higher Medicare surcharge tier through the specific accounts it draws from where an alternative is available.
Monte Carlo & risk
The year-by-year projection above is deterministic — it assumes every account earns exactly its expected return, every year. Real markets don't work that way, so Monte Carlo re-runs the entire plan thousands of times, drawing a random return each year for each account independently from its own expected-return/volatility pair, and tracks how many of those runs still have money left at the end of the plan. That percentage is your Plan Success Rate — a much more honest answer to "will this work" than a single optimistic-average projection, because it captures sequence-of-returns risk: a bad string of years early in retirement can sink an otherwise-sound plan even if the long-run average return is fine.
Escalation & proration
Nearly every dollar figure in the tool grows over time — but not all at the same rate. Salary follows the raise schedule you set (and can stop at a chosen year, modeling a planned phase-out). Spending escalates at the general inflation rate you choose, while health insurance premiums, out-of-pocket medical costs, and childcare each escalate at their own separately-set rate, since those categories have historically outpaced general inflation. A Data as of date lets the first year of your plan be a true partial year — prorating income, spending, and contributions for whatever's left of the current year — rather than treating January 1st as your starting point regardless of when you actually built the plan.
Contribution limits
401(k)/403(b) deferral limits (including catch-up contributions), IRA contribution limits and their income-based phase-outs for deductibility and direct Roth eligibility, SIMPLE IRA and SEP-IRA limits, and HSA contribution limits are all enforced using current statutory figures. If an input would exceed what's actually allowed, the tool caps the modeled contribution at the legal limit and flags the affected field, rather than silently modeling a contribution that couldn't happen in reality.
What this isn't
This is a modeling tool, not financial, tax, or legal advice. It applies current published tax rules and the assumptions you enter so you can explore scenarios yourself — it isn't a substitute for a CPA, tax attorney, or financial advisor, especially for a decision as consequential as when to retire or how to size a conversion.
It's built specifically for the US federal tax system. State tax is modeled as a flat rate rather than each state's real bracket structure, and the tool isn't set up to reflect any other country's tax rules.
Every projection is only as good as its inputs and its assumed rates of return. Nobody knows the actual market returns or actual future tax law between now and the end of your plan — the value here is in seeing how your plan responds to reasonable, transparent assumptions you control, and in stress-testing it against thousands of possible outcomes rather than one hopeful guess.