How It Works
- Only liquid, prediction-enabled assets are used
- Accumulation phase: assets grow with monthly contributions
- Retirement check: tests if the current portfolio can sustain withdrawals for the full retirement period
- Retirement phase: assets continue to grow but with monthly withdrawals and no contributions
- Optional inflation-adjusted withdrawals that increase over time
Key Assumptions
- 1Expected returns remain consistent during both phases
- 2Monthly contributions continue until retirement date — flat, unless the optional contribution growth simulation is enabled
- 3Withdrawals are distributed proportionally across all assets
- 4No contributions are made during the retirement phase
- 5Tax and inflation adjustments are optional and applied separately
- 6Only liquid assets are considered (illiquid assets like real estate are excluded)
Mathematical Approach
Accumulation phase (monthly): Each asset grows by: Value × (Annual Return / 12) + Monthly Contribution Retirement feasibility check uses Present Value of Annuity: Required Portfolio = Expenses × [(1 − (1 + r)^−n) / r] Where r = weighted monthly return, n = retirement months When inflation simulation is enabled, a growing annuity formula is used: Required = Expenses × [(1 − ((1+g)/(1+r))^n) / (r − g)] Where g = monthly inflation rate Retirement is possible when current portfolio ≥ required amount.
Important Limitations
- Market volatility not considered
- Assumes constant returns across both phases
- Does not model Social Security or pension income
- Withdrawal strategy is simplified (proportional across assets)
- Results become less accurate over longer time horizons
Important: This prediction is a mathematical model based on current data and assumptions. Actual results may vary significantly due to market volatility, economic changes, and personal circumstances. Use this as a planning tool, not a guarantee.
Frequently Asked Questions
How does Wealth Path calculate when I can retire early?
It simulates your liquid assets growing month by month with contributions, and each month tests whether the portfolio could sustain your target monthly expenses for your chosen retirement length, using a present-value-of-annuity check. The first month the test passes is your earliest retirement date.
Why are only liquid assets included?
Because you can’t pay for groceries with home equity. The prediction only counts investments, bank accounts, and crypto marked as liquid — real estate, vehicles, and retirement accounts you can’t access early are excluded for realistic planning.
Does it use the 4% rule?
Not for the decision itself. The retirement test is a present-value-of-annuity calculation over an explicit number of retirement years you choose (default 30). The 4% rule is only used to suggest a sensible default for your expense target.
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The information and calculations provided are for informational and educational purposes only and should not be considered financial, investment, or professional advice. Projections are hypothetical, based on assumptions that may not reflect actual market conditions. Past performance does not guarantee future results, and all investments carry risk of loss. Consult a qualified financial professional before making financial decisions.