How to read a retirement projection

A retirement projection packs decades of income, spending, taxes and investment growth into a few charts and a table. Read it the wrong way and a comfortable plan can look alarming, or a fragile one can look fine.

This guide explains the parts you'll see in most projections, including the app's, and the questions to ask of each.

Today's dollars or future dollars?

Every figure in a long projection is in one of two units:

• Future dollars (also called nominal dollars) are the amounts you'd actually see on a statement in that year.
• Today's dollars (also called real dollars) remove inflation, so each amount buys what it would buy today.

The difference is large over long periods. At 2.5% inflation, $100,000 of spending 25 years from now is about $185,400 in future dollars. Both numbers describe the same lifestyle.

Use today's dollars to judge whether a lifestyle is affordable. Use future dollars to match a projection to a statement or a tax return. The app lets you switch between them on most charts and tables.

One average path or many possible futures?

Projections come in two forms, and they answer different questions.

An average path assumes your investments earn their expected return every year and inflation is steady. It shows how money moves through your plan: what comes in, what goes out, which accounts pay for what, and what you owe in tax. The Cash flow screen uses this path, so every number can be traced.

A simulation runs the plan through many possible futures with ups and downs. It shows the range of outcomes and how often the money lasts. The Outlook screen shows this.

A smooth average path is not a forecast. Real returns are never average two years running. Use the average path to understand mechanics, and the simulation to judge risk.

Reading a range chart

A range chart, sometimes called a fan chart, shows outcomes by year across all simulated futures. Each line is a percentile:

• The 50th percentile (median) is the middle: half the futures did better that year, half did worse.
• The 10th percentile is a weak outcome: only 1 in 10 futures did worse that year.
• The 90th percentile is a strong outcome: only 1 in 10 did better.

One subtle point matters a lot. Each band is a range across futures at that year, not one path through time. The future that sits at the 10th percentile at age 70 may sit at the 40th at age 85. To follow one future from start to finish, use "Look inside one future" on the Outlook screen.

A worked example

Here's one row from a cash flow table for an invented couple, Dana and Lee, in the year Dana turns 70. Amounts are in today's dollars.

The row balances: $48,000 of benefits plus $46,500 of withdrawals covers $90,000 of spending and $4,500 of taxes.

Opening that year shows the detail. A flow diagram traces each dollar from its source to its use. A tax card shows adjusted gross income, taxable income, top federal bracket and total income tax. Account balances at year end show which accounts were drawn down.

Five questions to ask of any projection

1. Does the first year look right? Compare the first year to your actual pay, spending and balances. If they're off, everything after is off too.

2. Where do withdrawals come from? A plan that empties taxable accounts first and leaves large traditional IRAs untouched may face big tax bills later, when required distributions start. See withdrawal order and required minimum distributions.

3. Are there tax spikes? Look for years where taxes jump. They often line up with required distributions, a home sale, or a partner's death, when the survivor moves to single brackets.

4. What drives net worth late in life? If net worth climbs steeply in your 80s, you may be under-spending. If it falls to zero, look at the simulation to see how often that happens.

5. Which assumptions are defaults? The app marks assumptions you haven't set yourself, such as returns and inflation. Defaults are starting points, not forecasts.

What a projection can't tell you

A projection depends on its inputs, and some inputs are guesses:

• Returns and inflation. No one knows them. Simulations show a range, not the answer.
• How long you'll live. Plan for longer than average.
• Future tax law. The app uses published figures for 2026 and projects later years by indexing current law for inflation, plus changes already enacted. Congress may change the rules.
• Your future choices. Real households adjust. A projection that never changes spending is more pessimistic than real life in bad markets and more conservative in good ones.

Frequently asked questions

Why does the Cash flow screen not show investment growth?

The table focuses on money moving in and out. Growth shows up in the net worth column and in the account balances when you open a year.

Why is my projected tax higher in later years?

Common causes are required minimum distributions, Social Security becoming more taxable as other income rises, and moving from joint to single brackets after a spouse's death.

Why is the median ending net worth so large?

In the median future, investments keep growing for decades. Large late-life balances often mean the plan could support more spending earlier. Check the lower percentiles before acting on it.