How to use Step 5

Step 5: Your Assets and Accounts

Enter the total current value of each account or asset type you indicated on Step 1.

Make sure to fill dates and values here.

No asset accounts selected. Go back to Step 1 and check at least one asset type to continue.

How This Model Calculates Withdrawals & Taxes

Step 1 — Calculate Your Monthly Income Gap

Each month the model compares your target retirement income against your guaranteed fixed income — Social Security, pension, and any other income you entered. The shortfall is your income gap.

                        Income Gap = Target Income − (Social Security + Pension + Other Fixed Income)
                    

If your fixed income already covers your target, no account withdrawals are needed that month.

Step 2 — Draw from Qualified (Pre-Tax) Accounts First

When a gap exists, the model withdraws from your qualified (pre-tax) accounts first — Traditional 401(k), Traditional IRA, 403(b), and similar accounts.

Because these withdrawals are taxed as ordinary income, the model draws a larger amount than the gap and sets aside the tax portion — so your net cash after taxes equals exactly what you need. This is called a "gross-up."

                        Amount Drawn = Income Gap ÷ (1 − Effective Tax Rate)
                    

Example: You need $2,000 net and your effective tax rate is 20%.
Gross draw = $2,000 ÷ 0.80 = $2,500 • Tax withheld = $500 • Net cash = $2,000 ✓

Step 3 — Draw from Non-Taxable Accounts Second

Once qualified accounts are depleted — or if you have no qualified accounts — any remaining income gap is filled from your non-taxable (after-tax) accounts: Roth IRAs, Roth 401(k)s, and savings accounts.

No gross-up is needed. Every dollar withdrawn adds a dollar of spending cash, with no tax consequence.

Annual Tax Calculation

At the end of each year the model calculates your estimated federal and state income tax. Taxable income consists of:

All qualified (pre-tax) account withdrawals for the year
Pension income
Other fixed income
The taxable portion of your Social Security benefit

Social Security Taxability: The IRS uses a "provisional income" test — half of your annual Social Security benefit plus all other income. Above certain thresholds, up to 85% of your Social Security benefit becomes taxable income. Below the lower threshold, none of it is taxable.

Federal tax is applied using 2026 brackets. State tax is applied at the flat rate you provided. The combined tax is deducted from your account balance each December.

The Tax Cliff: Why Your Tax Bill May Drop Sharply at a Certain Age

If you have both qualified and non-taxable accounts, you may notice a significant drop in your estimated annual tax bill at a specific age. This is not an error — it reflects the moment your qualified (pre-tax) account balance reaches $0. After that point, all withdrawals come from your tax-free accounts. Since those withdrawals do not count as taxable income, your adjusted gross income falls sharply, and your tax bill can drop dramatically or disappear entirely.

Important: This model uses a fixed withdrawal order — qualified accounts first, then non-taxable. This is a simplification. In practice, some retirees benefit from a "tax bracket filling" approach: drawing down pre-tax accounts strategically while still in lower tax brackets, to reduce larger taxable distributions or required minimum distributions later. This model does not optimize for that strategy. Use these projections for planning guidance and review them with a qualified financial professional.

Future Contributions

Tell us when you plan to stop working and how much you'll continue saving each year until then.

When do you plan to stop contributing to these accounts?

Annual Future Contributions ($)

Set the stop date above — contributions are only counted in your forecast up to that date.

Projected Balance Calculation

Defined retirement timeline not yet set. Set your retirement date to see growth projections.

Today's
Balance

Pre-Retirement
Windfalls

Contributions
& Growth

Projected Total Balance

+$0

Pre-Retirement Growth Rate — applies today through your withdrawal start date only 5.0%

0% 12%

Once withdrawals begin, a separate rate controls portfolio performance during retirement.

Future Windfalls & Inheritance

Note: The model will incorporate these amounts into your account and asset balances as of the dates you have designated.

Dollar Amount	Date Expected	Tax Status i

Leave unused rows blank. Past dates are ignored by the model.

🎁 Future Windfalls

Do you expect to receive an inheritance, a lump sum, or other one-time future payment?

Household Totals Guidance

Enter the combined total for both you and your spouse in each bucket below. Add all Qualified accounts together; add all Non-Qualified accounts together. Do not mix the two types — the model keeps them as separate tax buckets because Qualified (IRA/401k) withdrawals are taxable, while Non-Qualified (Roth/Savings) withdrawals are not.

Account Balance Worksheet

Enter individual balances below — totals will be applied to your main page.

Column 1 — Qualified (Pre-Tax)

You haven’t paid income tax on this money yet. Withdrawals will be taxed as ordinary income.

Examples: Traditional 401(k) • 403(b) • Traditional IRA • SEP IRA • 457(b)

Rule of thumb: if you got a tax deduction when you contributed, it goes here.

Column 2 — Non-Qualified (Post-Tax)

You’ve already paid income tax on this money. Withdrawals are treated as tax-free in this model.

Examples: Roth IRA • Roth 401(k) • Savings / CDs • Brokerage (cost basis)

Pro tip: for brokerage accounts, use only your deposited principal for the most conservative estimate.

Retirement Modeler