Assumptions & method
A projection is only as good as what goes into it. This page lists every rate the calculators use, the conventions the engine follows, and — just as importantly — what the model deliberately leaves out.
Timing
How each year is simulated
The engine runs in nominal dollars year by year, then converts back to today’s purchasing power for display. Running nominally matters because tax brackets, contribution caps and wage growth all behave differently from a simple real-return model.
While you are working: balances grow for the year, then the year’s savings are added at the end. This is the conservative convention and matches the formula used by most public FIRE calculators.
Once you are retired: the year’s spending comes out at the start of the year, then whatever is left grows. Again conservative, and it avoids flattering a plan that is only just surviving.
The preservation-age rule: before your retirement accounts unlock, spending can only be drawn from accessible investments. After that age, withdrawals are taken pro-rata across both pools. A retirement age only counts as feasible if spending is fully funded in every single year through to your planning horizon.
Defaults
Why the defaults are reasonable
Every calculator starts from these assumptions, and every one of them can be changed in its inputs. The figures for your own situation (age, income, balances, spending) are examples to replace, not assumptions about you.
Return outside super / in the brokerage account
- Australia
- 8.0% before fees
- US
- 8.0% before fees
A long-run nominal return for a growth portfolio mostly in shares, about 5.5% a year above inflation. Australian and US shares have returned more than this over the past century, and the default leaves a margin below that history because future returns may be lower.
Return in super / the 401(k)
- Australia
- 7.5% before fees
- US
- 8.0% before fees
Australia: the long-run objective of a balanced-to-growth super option after the fund's tax on earnings, which is how funds report returns. It is in line with the 7% to 7.7% a year ASIC uses as an example of reasonable long-term earnings in its guidance for super calculators (RG 276.207). US: the same portfolio as the brokerage account, since growth inside a 401(k) or IRA is not taxed along the way.
Fees
- Australia
- 0.20% outside super, 0.70% in super
- US
- 0.05% brokerage, 0.15% 401(k)
Outside super or in a brokerage account: the cost of a diversified low-cost index fund or ETF portfolio. In super: the investment and administration fees of a balanced or growth option in a large fund on a balance of this size; smaller balances often pay more as a percentage. 401(k) fees vary widely by plan. Your own statements give your actual fees.
Tax drag outside super / in the brokerage account
- Australia
- 0.00%
- US
- 0.40%
Australia: franking credits offset most of the tax on Australian share dividends for most investors, so the default is nil; it can be raised for unfranked income or a high tax rate. US: a conservative allowance for tax on the dividends a broad share fund pays each year, at the qualified-dividend rate plus state tax.
Inflation
- Australia
- 2.5%
- US
- 2.5%
Australia: the midpoint of the Reserve Bank of Australia's 2-3% target. US: the Federal Reserve targets 2% on its preferred measure, and consumer prices have tended to run a little above it. 2.5% is also the rate ASIC's calculator relief uses for present values unless the user sets another.
Salary growth
- Australia
- 3.7%
- US
- 3.5%
Australia: ASIC's standard assumption for wage growth in super forecasts (RG 276), about 1.2% a year above inflation. US: about 1% a year above inflation, in line with long-run growth in average wages.
Withdrawal rate
- Australia
- 4.0%; 3.5% for Lean FIRE
- US
- 4.0%; 3.5% for Lean FIRE
The rate the Trinity study and Bengen's research found sustained a 30-year US retirement through historical markets. Lean FIRE uses a lower rate because a lean plan has less room to cut back. It sets the headline target only: whether a plan lasts is tested year by year to the plan-to age.
Plan to age
- Australia
- 92
- US
- 95
Australia: the age ASIC's superannuation calculator relief uses as the end of retirement. US: a margin over life expectancy at 65, since a meaningful share of people live into their nineties. Both are well past average life expectancy, because running out of money early is the risk that matters.
Tax on withdrawals
- Australia
- 0.0%
- US
- 8.0%
Australia: super paid as a pension from 60 is tax free, and withdrawals from investments outside super before then are largely covered by the tax-free threshold and the 50% capital gains discount. US: a blend of long-term capital gains rates on the brokerage account and ordinary income tax on traditional 401(k) withdrawals, after the standard deduction, for a typical early retiree.
Age Pension / Social Security, when added
- Australia
- $30,000 a year from 67
- US
- $24,000 a year from 67
Australia: about the full single rate, supplements included, kept level in today's dollars. It is means-tested in practice, and the calculators do not test it. US: around the average retired-worker benefit; your own statement from the Social Security Administration gives a better figure.
Coast FIRE fees
- Australia
- 0.50%
- US
- 0.10%
Roughly the FIRE calculator's fees blended across both pools for the default balances, since Coast FIRE uses one rate for both.
Drawdown simulator: shares
- Australia
- 6.5% real, 17.5% volatility
- US
- 6.5% real, 17.5% volatility
Close to the long-run real return and year-to-year swings of Australian and US shares over the past century. Shares worldwide have returned less, which is a reason to try lower figures.
Drawdown simulator: bonds and cash
- Australia
- Bonds 2.0% real, 7.0% volatility; cash 0.5% real, 1.2% volatility
- US
- Bonds 2.0% real, 7.0% volatility; cash 0.5% real, 1.2% volatility
Close to the long-run real returns and swings of government bonds and cash in both countries.
Drawdown simulator: share–bond correlation
- Australia
- 0.10
- US
- 0.10
A low positive correlation reflects the long-run average, though it has swung both ways over time.
Drawdown simulator fees
- Australia
- 0.50%
- US
- 0.20%
The investment and platform fees of a diversified retirement portfolio. In Australia that is typically held in super's pension phase, which costs a little more.
Present value in Australia. Results are shown in today’s dollars at your inflation rate. The Australian calculators that project super also show ASIC’s standard present value, which converts future dollars at 3.7% a year until retirement age, about the rate wages grow, and 2.5% a year after, so that forecasts from different providers can be compared.
Australia · 2026-27
Australian rates and caps
| Taxable income | Rate |
|---|---|
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 15% |
| $45,001 – $135,000 | 30% |
| $135,001 – $190,000 | 37% |
| $190,001+ | 45% |
- Medicare levy of 2%, with the low-income shade-in applied.
- Superannuation Guarantee of 12%, levied up to a maximum contribution base of $270,830.
- Concessional contributions cap of $32,500, inclusive of employer contributions. Salary sacrifice above the cap is returned to take-home pay.
- Contributions tax of 15%, plus Division 293’s additional 15% once income plus concessional contributions exceeds $250,000.
- Preservation age of 60, which applies to everyone born on or after 1 July 1964.
- Withdrawals default to a 0% tax rate: super drawn as a pension after 60 is tax free, and pre-60 drawdowns from outside super are largely sheltered by the tax-free threshold and the 50% CGT discount.
Sources: ATO: Tax rates for Australian residents; ATO: Medicare levy; ATO: Super guarantee rates and thresholds; ATO: Contributions caps; ATO: Division 293 tax on concessional contributions by high-income earners; Moneysmart (ASIC): Getting your super.
United States · 2026
US rates and limits
| Taxable income (single) | Rate |
|---|---|
| $0 – $12,400 | 10% |
| $12,401 – $50,400 | 12% |
| $50,401 – $105,700 | 22% |
| $105,701 – $201,775 | 24% |
| $201,776 – $256,225 | 32% |
| $256,226 – $640,600 | 35% |
| $640,601+ | 37% |
- Standard deduction of $16,100 single and $32,200 married filing jointly. Itemising is not modelled.
- 401(k) elective deferral limit of $24,500, plus a $8,000 catch-up from age 50 and $11,250 for ages 60 to 63. The IRA limit is $7,500.
- FICA at 6.2% up to the Social Security wage base plus 1.45% Medicare, with the additional 0.9% above $200,000 single and $250,000 joint. Deferrals reduce income tax but not FICA.
- Employer matching defaults to 50 cents per dollar on the first 6% of salary, and is adjustable.
- Penalty-free access at 59½. The Rule of 55 and 72(t) SEPP are flagged in the bridge panel but are not modelled as automatic access.
- State income tax is a flat, optional rate — set it to match your state, or leave it at zero.
Sources: IRS: Tax inflation adjustments for tax year 2026; IRS: 401(k) limit increases to $24,500 for 2026, IRA limit increases to $7,500; IRS Topic 558: Additional tax on early distributions from retirement plans other than IRAs; IRS: Exceptions to tax on early distributions.
The drawdown simulator
How the Monte Carlo model works
Each simulated year draws a return for shares, bonds and cash from a normal distribution around the mean and volatility you set, with a configurable correlation between shares and bonds. The portfolio return is the allocation-weighted blend, less fees.
Everything is in real terms, so results are directly comparable to the Trinity study and similar published research. The random seed is fixed, which means the same inputs always produce the same answer — change an input and any movement you see is real, not noise.
The “safe spend” figure is solved by bisection: the simulator repeatedly re-runs at different spending levels to find the highest one that still meets your target success rate.
Honesty
What this model does not do
It does not model the Age Pension or Social Security means tests, only a flat amount you can switch on. It does not handle capital gains cost bases, franking credits in detail, property, private businesses, defined benefit schemes, unequal partner ages or individual contribution caps within a couple.
Tax law is held as it stands. In Australia the tax brackets, the Medicare thresholds and the Division 293 threshold stay at today’s amounts, while the concessional cap and the maximum contribution base grow with wages, as the law provides; past governments have lifted the brackets from time to time. In the US, brackets, limits and the standard deduction rise with inflation, as the law provides. Any change to the law changes the result, so long-dated projections are directional, not predictive.
Returns in the accumulation projection are a fixed rate, not a sequence. That is deliberate: it keeps the accumulation answer stable and readable. Sequence risk is where it actually bites, in the drawdown simulator.
General information, not advice