Retirement & FIRE Planning

The retirement planner is a first-class goal type that simulates your portfolio year by year, models the spending, income, taxes, and asset allocation that will apply in retirement, and tells you when (and whether) you can stop working. It powers both traditional retirement planning and FIRE (Financial Independence, Retire Early).

It is the most opinionated calculator in Wealthfolio – please read the assumptions and limitations sections below before acting on its output.

Creating a Retirement Goal

1. Open Goals → + New Goal and choose Retirement.
2. Pick a Planning Style:
   • Traditional – you nominate a retirement age and the planner reports whether you’ll be funded by then.
   • FIRE – the planner finds the earliest age at which you become financially independent, and only “starts withdrawals” once you actually have the required capital.
3. Enter your birth month and your planned retirement age (or desired independence age).
4. Save. Only one retirement goal is allowed per portfolio.

Retirement goals open into a two-tab workspace:

• Overview – the projection dashboard with the configurator sidebar.
• What If – Monte Carlo runs, stress tests, and sensitivity analysis.

The Plan: What You Configure

The configurator sidebar groups inputs into the sections below. Defaults are shown in parentheses.

Personal profile

Investment assumptions

The fee rate is subtracted from both pre-retirement and retirement returns to produce the net rate used in the projection.

Enter both returns as long-run compound annual rates (CAGR): the rate your money actually grows each year, not the simple average of yearly returns.

Expenses

You add expense buckets, each with:

• A monthly amount in today’s money.
• An optional start age and end age (e.g. mortgage paid off at 65, healthcare from 67).
• An optional custom inflation rate that overrides the general inflation rate (useful for healthcare).
• An essential flag – essential expenses must be funded for the plan to count as successful; discretionary expenses are nice-to-have.

Income streams

Add Social Security, pensions, annuities, or any DC fund that pays out in retirement.

For DC funds without an explicit monthly amount, the planner estimates the payout as accumulated_balance × 3.5 % ÷ 12. This 3.5 % rate is baked in and not configurable.

Tax profile (optional)

The bucket balances drive the withdrawal ordering: taxable accounts are drawn down first, then tax-deferred, then tax-free.

Funding

Like other goals, retirement is funded by allocating percentages of your existing accounts in Account Shares. A new retirement goal starts with every eligible account at 100 %, and an account you add to it also starts at 100 %. Accounts already linked to a DC income stream cannot also be added as plain funding sources for the same goal – they’re already part of the projection.

Retirement can share accounts with savings goals. An active savings goal sets its share of an account aside, and Retirement counts what’s left, up to its own share. With a savings goal holding 30 % of an account, a retirement share of 100 % counts 70 %, and the account shows Counting 70%. Savings goals together still can’t pass 100 % of an account; Retirement’s share never limits them. Each account share shows its amount beside the percentage.

Savings goals keep their own money, so the retirement projection leaves it out. Plan inputs shows what active savings goals plan to add each month beside your monthly contribution (Savings goals also plan …/mo), so you enter only what goes to retirement and the same money isn’t entered twice. Goals past their target date aren’t included.

Upgrading from 3.11. Existing goals count the same money after the update. If you sync devices, update all of them before a savings goal shares an account with Retirement. Until it updates, a device on 3.11 counts that money in Retirement too, sees more than 100 % of the account in use, and refuses to save funding on that account or reactivate a goal that uses it.

What the Dashboard Shows

The Overview tab renders three primary visualisations:

Portfolio trajectory chart – your projected balance year by year (Projected), coloured by whether the plan is on track, and a dashed Required line showing the required capital glide path – the minimum balance you need to be at each age to fund the rest of the plan. A vertical line marks your retirement age; in FIRE mode, a second line marks the projected FI age when it differs.

Each active savings goal with a target date inside the chart’s age range appears as a marker at its target date, coloured by its status. Savings goals keep their own money, so the projection leaves it out. Select Savings goals in the legend to show or hide the markers, or select a marker to open that goal.

Coverage chart – a stacked area showing where each year’s spending comes from: essential expenses on the bottom, discretionary above, then income streams stacked on top, with portfolio withdrawals filling whatever is left.

Snapshot table – a year-by-year breakdown: portfolio value, contributions, withdrawals, taxes paid, required capital, surplus or shortfall.

A value mode toggle switches every figure between nominal (future-dollar) and today’s money display. Hiding balances hides the planner’s amounts too.

KPIs

• Progress to FIRE target – % of required capital you have at the goal age.
• FI age – first age your portfolio reaches the required capital.
• Retirement start age – when withdrawals actually begin under your selected mode.
• Funded at retirement – whether your portfolio meets or exceeds the required capital at the retirement start.
• Portfolio at goal age – projected nominal balance.
• Shortfall / surplus – gap between projected portfolio and required capital.
• Coast FIRE amount – minimum today’s balance needed to reach the goal with zero further contributions.
• Coast reached – whether your current portfolio meets the coast amount.
• Funded through age – the latest age the plan still covers essential spending.
• Failure age / spending shortfall age – first age the portfolio depletes, or the first age essential spending is materially under-funded.
• Required additional monthly contribution – extra savings needed to close the gap.
• Suggested goal age – if your target age isn’t reachable, the earliest age that is.

What If

The What If tab runs the same plan through stochastic and stress scenarios:

• Monte Carlo – randomised paths (return draws from a lognormal distribution calibrated to your input return and volatility, inflation correlated -0.25 to returns). Default is 5,000 paths; you can run 10,000 or 100,000. Reports a success rate plus 10th–90th percentile bands on its own chart.
• Sensitivity – sweeps a single parameter (return, contribution, retirement age…) and shows how the outcome moves.
• Sequence-of-returns risk (SORR) – stress-tests the early retirement years where a market drop hurts the most.

A Monte Carlo run is considered successful when, in every year: essential spending was fully funded, and the portfolio remained above zero at the planning horizon. (FIRE plans additionally require that FI was reached.)

How the Engine Works

The retirement engine is a deterministic year-by-year simulation with an optional Monte Carlo overlay. There is no separate “4 % rule” calculator – the FIRE number falls out of the simulation.

The deterministic projection

Year by year, from current age to the horizon age:

1. Accumulation phase – the portfolio grows at the net pre-retirement return (gross minus fees). Monthly contributions are added during the year and grow with the contribution-growth rate annually. Contributions stop at the retirement start age.
2. FIRE transition – the simulation switches to the retirement phase the first time either of these is true: the portfolio reaches the required capital glide-path target (FIRE mode), or you hit your target retirement age (Traditional mode forces it).
3. Retirement phase – the portfolio grows at the net retirement return. Each year, expenses (less income streams) are withdrawn following the bucket order: taxable → tax-deferred → tax-free. Withdrawals are grossed up to cover the relevant tax rate; tax-deferred withdrawals before penalty_age also pay the early-withdrawal penalty.
4. The plan succeeds as long as no year shows a material shortfall (gap larger than the greater of $1 or 0.1 % of the year’s spending).

All inputs are interpreted in today’s money (real terms) – inflation is then applied annually to expenses and income streams, and outputs are reported in nominal dollars by default. Use the value-mode toggle to flip back to today’s money.

How “required capital” is found

The engine binary-searches for the smallest starting balance at the retirement age that lets the year-by-year ledger run from there to the horizon without a material shortfall. This is the FIRE number for your plan and the basis of the dashed glide-path line.

How Monte Carlo works

Returns each year are drawn from a lognormal distribution calibrated to your mean return and volatility (the median of the lognormal is anchored to the deterministic return so the median MC path matches the deterministic line). Inflation is drawn each year with a -0.25 correlation to returns. Paths are evaluated in parallel (default 5,000); success is the share of paths that meet the success criteria above.

Engine Assumptions

These are baked into the model and worth knowing before you trust the output:

• Real terms inputs – every rate and amount you enter is treated as today’s money. Inflation is then applied internally.
• Deterministic return path – the central projection uses constant returns. Volatility only feeds the Monte Carlo / What If tab.
• Annual ledger – withdrawals, contributions, and growth are settled once per year. The model isn’t designed for sub-annual planning.
• Withdrawal ordering – strictly taxable → tax-deferred → tax-free. There is no smart Roth-conversion or tax-bracket-aware optimisation.
• DC pension default draw rate – 3.5 % per year, hard-coded.
• Return / inflation correlation – -0.25, hard-coded.
• Contribution routing – future contributions are added to the existing tax buckets in the same proportion as the current bucket balances. Per-account contribution routing isn’t modelled.
• No rebalancing modelling – buckets aren’t rebalanced; their proportions drift only as withdrawals deplete them.
• Inflation guardrail – the cumulative inflation factor is clamped to a minimum of 0.01 to prevent divide-by-zero blow-ups in extreme deflation scenarios.
• Required-capital search – found by an expanding search with no fixed ceiling, so even very large targets resolve.

Limitations

The planner is a strong directional tool, not a financial advisor. Specifically, it does not model:

• Tax brackets, marginal rates, or capital gains – only flat effective rates per bucket.
• Roth conversions, RMDs, or IRMAA – withdrawal ordering is fixed.
• Healthcare-specific accounts (HSA, FSA) other than as a generic tax-free bucket.
• Social Security claiming strategy – only a fixed start age and amount.
• Variable spending strategies (guardrails, CAPE-based, Guyton-Klinger) – every year withdraws the planned schedule, no more, no less.
• Survivor / spousal planning – single-life model.
• Currency mix during retirement – the whole plan runs in your base currency.
• Rebalancing trades or transaction costs – only aggregate fees via the fee rate.
• Estate planning – what’s left at the horizon age is just reported, not modelled forward.

If your situation needs any of the above with precision, treat the planner’s output as a sanity check rather than a final answer.

FIRE Mode in Detail

FIRE in Wealthfolio is not a separate calculator – it’s a mode of the retirement planner. Under FIRE mode:

• The FIRE number is the required capital the engine solves for at your target age.
• FI age is the first year the projected portfolio crosses the required capital glide path.
• Coast FIRE is the minimum balance you’d need today to ride to the goal with zero further contributions: required_capital ÷ (1 + accumulation_return)^years_to_goal.
• Lean FIRE / Fat FIRE aren’t separate switches – model them by adjusting your expense buckets (lower = lean, higher = fat) and re-running.

Even in FIRE mode the planner won’t start drawing down before your target retirement age; reaching FI early just unlocks the option to retire, it doesn’t force the simulation to do so.

Related

• Goals & Save-Up Planner – for non-retirement goals.
• Contribution Limits – track yearly room on retirement accounts.
• Performance Metrics – how returns are computed from your real history.