Our Methodology
How we turn complex financial data into clear, actionable forecasts.
Our Approach
We believe financial planning should be transparent, not a black box. Every calculation in your forecast is based on published IRS and Social Security Administration formulas. We show you the path, not just the destination—so you can understand exactly how changes to your plan affect your future.
What We Calculate
Social Security Benefits
- Primary Insurance Amount (PIA) using SSA bend points ($1,226 / $7,391)
- Early claiming reductions (up to 30% if you claim at 62)
- Delayed retirement credits (8% per year up to age 70)
- Spousal benefits (up to 50% of higher earner's benefit)
- Cost-of-living adjustments (COLA) applied annually after you start receiving benefits
- Full Retirement Age based on your birth year
Federal Taxes
- 2025 marginal tax brackets for single and married filing jointly
- Standard deduction with age 65+ bonus ($1,950 single / $1,550 per spouse married)
- FICA taxes on W-2 wages (6.2% Social Security + 1.45% Medicare)
- Self-employment tax (SECA) at 15.3% with proper wage base coordination
- Additional Medicare Tax (0.9%) on high earners
- Taxable Social Security calculation based on combined income thresholds
Capital Gains
- Tiered long-term rates: 0%, 15%, and 20% based on your taxable income
- Bracket stacking—ordinary income fills lower brackets before capital gains are taxed
- Net Investment Income Tax (NIIT) of 3.8% when applicable
- Cost basis tracking so you're only taxed on actual gains
Retirement Accounts
- Traditional and Roth 401(k) with 2025 contribution limits ($23,500 + $7,500 catch-up)
- Traditional and Roth IRA with contribution limits ($7,000 + $1,000 catch-up)
- Traditional IRA deduction phase-out if covered by workplace plan ($79K–$89K single, $126K–$146K married)
- Roth IRA contribution phase-outs ($150K–$165K single, $236K–$246K married)
- Required Minimum Distributions (RMDs) using IRS Uniform Lifetime Table
- SECURE 2.0 compliant: RMDs start at 73 (or 75 if born 1960+)
- Employer matching contributions
Withdrawal Strategy
- Tax-efficient ordering: cash first, then taxable investments, then traditional accounts, Roth last
- Automatic gross-up to cover taxes on withdrawals
- RMDs factored into withdrawal calculations
Monte Carlo Simulations (Pro)
- 1,000 simulations using geometric Brownian motion
- Year-by-year return variation to capture sequence-of-returns risk
- Percentile bands (10th, 25th, 50th, 75th, 90th) so you see the range of outcomes
- Success probability based on whether your portfolio lasts through retirement
What We Don't Calculate
To keep the tool focused and accurate, we've intentionally excluded some areas. These may be added in future versions, but for now, here's what's outside our scope:
- State and local income taxes—we model federal taxes only
- Alternative Minimum Tax (AMT)
- Estate and inheritance taxes
- Itemized deductions—we use the standard deduction for simplicity
- Pension income modeling—you can enter pensions as "other income"
- Part-time work or side income during retirement
- Long-term care insurance or detailed healthcare cost modeling
- Divorce, remarriage, or complex family structures
- Social Security survivor benefits after a spouse passes
- Roth conversion ladder optimization
Default Assumptions
Your forecasts use these baseline assumptions, which are based on historical averages and conservative projections. You can see how changes affect your plan by creating what-if scenarios.
Data Sources
We pull our tax brackets, contribution limits, and Social Security parameters from official sources and update them annually:
- IRS—federal tax brackets, standard deductions, retirement contribution limits
- Social Security Administration—bend points, full retirement ages, COLA rates
- Historical market data—default return and volatility assumptions
A Note on Accuracy
No forecast can predict the future with certainty. Markets fluctuate, tax laws change, and life happens. Our goal is to give you a reasonable, evidence-based projection so you can make informed decisions—not a guarantee. We recommend revisiting your plan quarterly and consulting a financial advisor for personalized guidance.