How the retirement projection works

PiggySize projects your retirement by simulating your entire financial life one month at a time, from today until age 95. Every account, contribution, tax, and withdrawal is recalculated for each of those months instead of being estimated with a single formula — that's how the projection can show you the month Social Security starts, when Medicare kicks in, or when your portfolio might run dry.

How it works

• Four buckets, one timeline. Your retirement savings — your "nest egg" — is split into four account types: Traditional (401(k)/IRA, taxed when you take money out), Roth (already taxed, grows tax-free), Taxable (brokerage and savings), and HSA (health savings). Each bucket grows on its own every month at your Growth Rate, tracked separately from today through age 95.
• Building up, before retirement. Until you retire, the projection adds your paycheck contributions — 401(k)/403(b)/457/TSP, IRA, Roth, HSA, and any employer match — every month, capped at the current IRS contribution limits for your age (including the extra "catch-up" amount allowed once you turn 50).
• Drawing down, after retirement. Once you retire, the projection covers your monthly spending in this order: your remaining active income, then Social Security, then pensions (adjusted yearly for cost of living), then annuities, then your HSA (for medical costs), then real-estate sale proceeds if you've downsized, and finally your investment accounts — taxable first, then Traditional, then Roth last. Taking money out of an account like this is called a withdrawal. This order is designed to leave your tax-free Roth money growing as long as possible.
• Required Minimum Distributions (RMDs). The IRS requires you to start withdrawing from Traditional accounts at a set age — 73 if you were born 1951–1959, or 75 if you were born in 1960 or later. The projection applies this automatically, using the IRS's official withdrawal-percentage table for your age. If an RMD is bigger than what you need that month, the extra is reinvested into your taxable account instead of sitting idle.
• Taxes. The projection uses one flat Effective Tax Rate (which you set yourself) instead of modeling every IRS bracket — see Assumptions and limits below for what that means. Social Security itself is only partly taxable: the projection uses the IRS's formula, based on your "provisional income" (your other income plus half your Social Security benefit), to work out whether 0%, up to 50%, or up to 85% of your benefit is taxed.
• Milestones. As the simulation runs, it logs the big moments in order — retirement, Social Security start, pension and annuity payments starting, the Medicare transition at 65, age 59½ (penalty-free withdrawals), RMDs starting, loans paid off, long-term care starting, a home sale — so you can see exactly when each one lands on the chart.
• Your plan's health. After running the full timeline, PiggySize tells you in plain language whether your plan is on track. On track means your savings are projected to last through age 95. At risk means they're projected to run out between 90 and 94. Behind means between 80 and 89. Critical means before 80. You'll find this written out under the Balance chart on the Retirement page.

A worked example

Say you're 60 with $500,000 in a Traditional 401(k), planning to retire at 65 with a $2,500/month Social Security benefit starting at 67. Between 60 and 65, the projection keeps adding your contributions and growing your balance at your Growth Rate. At 65, it stops counting your paycheck and starts covering your bills from your accounts instead. From 65 to 67 — before Social Security starts — it draws from your Taxable account, then your Traditional account, to cover the gap. Once Social Security begins at 67, it covers part of your spending, so less comes out of your portfolio each month. At 73, Required Minimum Distributions kick in automatically, whether or not you need the money that month. The chart shows this whole story as one continuous line from today through age 95.

Assumptions and limits

• Taxes are a flat rate, not brackets. The Effective Tax Rate setting is one blended percentage, not a simulation of actual federal and state tax brackets. It's a reasonable approximation for long-range projections, but your real tax bill in any given year could be higher or lower.
• The Dashboard and Piggy use simplified math. The Retirement page runs the full month-by-month simulation described above. The Dashboard summary and Piggy's answers use faster, simplified formulas to estimate the same numbers, so they can differ slightly from what the Retirement page shows. If you notice a gap, treat the Retirement page as the more accurate source.
• One home sale. The projection models selling or downsizing your primary home once — it doesn't model buying and selling multiple properties.
• One steady growth rate per account, not year-to-year market swings — unless you turn on Monte Carlo simulation mode, which models thousands of randomized market paths instead. See Run a Monte Carlo simulation.
• US federal rules only. State-specific tax quirks aren't modeled individually — they're folded into your single Effective Tax Rate.