Fixed spending withdraws a set, inflation adjusted, amount each year, offering a predictable and stable income that simplifies budgeting for essentials. While this approach provides simplicity, it may not account for lifestyle changes or needs at various stages of retirement. Use one of the methods from Step 1 to estimate the income you will need to maintain a comfortable retirement.

IW Retirement Planner applies a 1% annual reduction to Fixed spending expenses, based on research from The Center for Retirement Research. You can modify this reduction amount in Assumptions.

Smile spending is an age-based approach to retirement spending, grounded in research showing that retirees often spend more in the early and late stages of retirement and less during the middle years. This method helps align spending with the evolving lifestyle and needs of a typical retiree. Use one of the methods outlined in Step 1 to estimate your initial expenses.

Dynamic spending provides the most flexibility by adjusting spending levels based on market performance and portfolio health. It is best suited for retirees who are willing to reduce expenses during lean market years in exchange for the ability to spend more initially and during favorable market years. This approach also helps mitigate the risk of outliving assets by adapting spending in response to changing economic conditions.

Dynamic spending starts with a withdrawal of 5% of your total investment portfolio. Each subsequent year adjusts the prior year's spending for inflation and then applies 'guardrails' of 4% and 6%. If the withdrawal amount falls below 4% of the total investment portfolio, it is increased to 4%. Conversely, if the withdrawal amount exceeds 6% of the portfolio, it is capped at 6%.

Readily available funds, including Savings, CDs, Money Market, and Treasury Bills. You can set a maximum value for this bucket using the Invest Excess Cash field. Any amount above this limit is automatically invested in Taxable Investments at year-end.

Includes stocks, bonds, and mutual funds held outside retirement accounts. You can specify the bond allocation and cost basis (the purchase price of investments).

Retirement accounts that allow you to defer federal income taxes until funds are withdrawn. Common examples include 401(k), 403(b), 457(b), IRA, SEP, and SIMPLE IRA accounts. You can specify the bond allocation for this bucket.

Retirement accounts where taxes are paid on contributions up front, so future growth and withdrawals are generally tax-free. You can specify the bond allocation for this bucket. If your 401(k), 403(b), 457(b), IRA, or SIMPLE IRA includes a Roth component, include that amount in this bucket.

Funds held within a Health Savings Account that can be used for qualified medical expenses. Investment growth in an HSA is tax-deferred, and withdrawals for eligible healthcare costs are tax-free. You can specify the bond allocation for this bucket to reflect how HSA assets are invested over time.

The retirement planner prioritizes HSA funds for medical expenses but will use them for general expenses if no other funds are available.

A federal program providing monthly retirement income based on your earnings history. Enter your estimated monthly pre-tax benefit at Full Retirement Age (in today's dollars) and the intended starting date. Refer to the FAQ for guidance on getting the most accurate FRA benefits estimate on SSA.gov. Spousal and survivor benefits are estimated automatically when applicable.

If you are already receiving Social Security benefits, enter your current before-tax benefit amount and the date your benefits began.

IncomeWize does not currently support custom spousal-benefit start dates for spouses with no work credits. The planner automatically starts spousal benefits at the earliest eligible date. See the FAQ Spousal Benefits section for details.

Provide a fixed monthly retirement income, typically funded by a former employer. Enter your expected pre-tax benefit starting amount and the percentage payable to a surviving spouse, if applicable. For pensions with cost-of-living adjustments (COLAs), enable automatic increases by setting the COLA rate in Assumptions. Lump sum distributions should be entered in Other Income.

If you are already receiving pension benefits, enter your current before-tax benefit amount and select Already Receiving for the starting date.

Includes recurring, non-earned income such as rental income, royalties, partnership (K-1) income, and non-qualified dividends. Enter your expected monthly pre-tax benefit, the ending date (or select Lifetime), and the percentage payable to a surviving spouse, if applicable. If your income increases annually, you can adjust the growth rate under Assumptions. All passive income is taxed as ordinary income.

If you are already receiving passive income, enter your current before-tax income amount and select Already Receiving for the starting date.

Post-retirement work, either part-time or during a staggered retirement gap.

Employment buckets cover only the years from your retirement date onward — for couples, the earlier of the two. Earnings before then aren't entered as income; instead, enter what you expect to save each year in Extra Savings.

Part-time work can be included to supplement retirement income or to explore early retirement options. Enter your expected annual pre-tax income, annual raise, and employment starting and ending dates.

If you or your spouse are already retired and working part time, enter the current annual income and select Already Employed for the starting date.

A gap arises when you and your spouse retire in different years. The planner offers to add an Employment bucket for the income the still-working spouse earns during that period, and it updates automatically if either retirement date changes.

IW Retirement Planner allows you to automatically estimate premiums for Medicare Part A (Hospital Insurance), Part B (Medical Insurance), and Part D (Prescription Drug Coverage), along with any applicable Income-Related Monthly Adjustment Amount (IRMAA) surcharges, in your annual expense projections.

You can include out-of-pocket costs such as deductibles, copays, and optional coverage including Medigap, dental, and vision. For help estimating these costs, refer to Chapter Medicare's The Complete Guide to Medicare Out-of-Pocket Costs.

Estimated pre-Medicare expenses can be included in your plan. They apply from each person's retirement date until they turn 65, when Medicare begins. For help estimating these costs, you may refer to the Kaiser Family Foundation's Health Insurance Marketplace Calculator, which accounts for subsidies, or Vanguard's Health Care Cost Estimator.

The U.S. Administration for Community Living estimates that a 65-year-old today has approximately a 70% chance of needing some form of long-term care in the future. You can add estimated long-term care costs for the final two years before longevity age. Tools like the Genworth Cost of Care Survey and Vanguard’s Health Care Cost Estimator can help forecast these expenses.

Allows you to choose which bucket to withdraw income from first, Taxable or Tax-Deferred Investments.

Allows you to convert Tax-Deferred Investment funds into Tax-Free Investments, up to a chosen federal income tax bracket. The ideal times to consider Roth conversions are usually during lower tax years, typically after retirement, but before starting Social Security or Required Minimum Distributions (RMDs).

Attempts to lower taxes to a specified federal income tax bracket by replacing Tax-Deferred Investment withdrawals, which are taxed as ordinary income, with Tax-Free Investments, or Taxable Investments which are taxed as long-term capital gains.