Planning for retirement

There are eleven numbers, all yours to set and change: your birth year, the age you will retire, the age to plan up to, three rates of return (low, expected, and high), inflation, the withdrawal rate, what you will spend in retirement (a percentage of your income now, or an amount a month), and any other monthly income. Leave one blank and Mintro uses a sensible default, labelled as a default. The Reyes household assumes returns of 4.8%, 6% and 7.2%, 2.1% inflation, spending 70% of today's income, and retiring at 63.

The projection works month by month from today to the end of the plan: contributions go in while you are working, debts are paid down, and returns compound. After you retire, your spending (rising with inflation) is taken out, from invested money first. It does this three times, at the low, expected, and high rates, and draws all three. There is no Monte Carlo simulation and no percentile, nothing you couldn't work out on paper from the numbers you typed. At 63, in January 2053, the Reyes household's savings come to $1,758,090.54 at the expected rate. That is more than their $1.2 million goal, but living on it with a 4% withdrawal would need $1,807,050, and at the plan's own level of spending the money runs out in April 2073, when they are 83. That is not a failure of the plan; it is the plan telling a 36-year-old the truth while there are twenty-seven years to do something about it.

The savings that retirement is paid from are cash and investments, minus loans that are not secured against something you own. The RRSP and the TFSA count, and bitcoin counts if you say so. The house does not, because you will be living in it, so the mortgage is left out with it. The truck doesn't count either. Net worth counts everything you own; retirement only counts what you could actually spend without selling the roof over your head.

Coast is the month your savings would reach the target even if you added nothing more. Enough is when your withdrawal rate applied to your savings covers your planned spending in retirement. Retirement is the age you set. Debt free is when consumer debt is gone; the mortgage has its own month. And runs out, the one to plan against, is the month your savings can no longer cover your spending: April 2073 for the Reyes household, at the expected rate. Each milestone has a date, and a scenario can change any of them: $400 a month more to the mortgage moves the runs-out month to July 2074, an inheritance moves it to December 2074, and Maya working part-time brings it forward to April 2069.

The house is recorded on Assets as a holding worth about $698,000, growing at 3% a year because that is the rate you gave it. It is counted in net worth, in the home and things band on the Goals chart. It is not part of the savings retirement is paid from, because you will be living in it. If your plan is to sell at 70 and move somewhere smaller, add that to a scenario as a sale in a particular month at a particular price, and the money from the sale joins your retirement savings from that month on.