How calculations work
How safe to spend is calculated
What the monthly safe-to-spend figure means for retirees and for working households, the inputs it uses, and how it relates to your guardrails.
Safe to spend is one figure per month, based on your actual balances and your comfort level. It's worked out differently depending on whether everyone in your household has retired.
If you're retired
Safe to spend is the monthly spending whose chance of needing a cut later matches your comfort level:
| Comfort level | Chance of needing a cut later |
|---|---|
| Cautious | about 1 in 10 |
| Balanced | about 1 in 5 |
| Flexible | about 3 in 10 |
The inputs:
- Investments: your current liquid investments, minus the set-aside (10% by default).
- Guaranteed income: Social Security, pensions and annuities for the rest of the plan, valued at a 1% real discount rate.
- Paid first: healthcare, planned one-time purchases and debt payments are subtracted before spending is worked out.
- Taxes: folded in using last year's ratio of taxes to spending.
- Ceiling: if you've set a maximum monthly spend, the figure stays at or below it.
The figure comes from the same lookup table as your guardrails, so it updates instantly when balances change. See how guardrails are calculated.
The result is split into essentials and everything else. The card describes the risk in words, such as "about a 1 in 5 chance you'd need to cut later."
If you're still working
For a working household, safe to spend is the level of spending that keeps your whole plan on track, including your planned savings, at your comfort level.
The app searches for the highest multiple of your planned spending at which the plan's chance of success is at least one minus your comfort level. For Balanced, that's 80%. It tries multiples from 0.3 to 2.5 times your planned spending, narrowing in over several rounds, each one a full simulation.
The figure shown is your planned recurring monthly spending, not counting one-time items, times that multiple, capped by any ceiling you've set. Because it assumes you keep saving as planned, it isn't a withdrawal amount.
The set-aside isn't used for working households' safe-to-spend.
When it changes
- When you update balances. A market move changes your investments and so the figure.
- When your plan changes. New income, costs or assumptions feed straight in.
- At the start of a month. The figure is for the current month.
- When you change your comfort level.
Safe to spend tells you what's sustainable at today's balances. Your guardrails tell you when your actual spending should change. Between guardrails, you don't need to chase small changes in safe to spend.
Caveats
Safe to spend is an estimate. It assumes your return and inflation assumptions hold on average, with ups and downs, and that tax law continues as written, adjusted for inflation. It isn't a guarantee or advice.