How long will my money last after work income ends?

Most people whose work income is about to end wonder whether the money will outlast them. A forecast can show when recorded cash runs short, or that it lasts to the end date you chose.

It does this by running your records forward month by month, using the spending and growth rates entered. The answer holds under those assumptions, and you can change them.

What does it mean when the forecast says the money lasts?

The example household's saved projection starts when work income ends, on 1 July 2033 with household spending of $120,000 a year, and runs 25 years. Cash lasts to 30 June 2058, the end of the plan. PropRetire's Cash runs out result reads "Never" within that period.

"Never" does not mean forever. It means the calculation found no day when cash falls below zero before the plan ends. If you want to know about a longer time, the plan has to be run for a longer time.

The model does not divide today's savings by one year's spending. Each month it adds the money coming in and takes out the payments, tops cash up from the funding accounts you included, and repeats that through the plan.

How is a ten-year cash forecast different from a future cashflow projection?

Cash over time starts from each legal owner's recorded cash today and runs up to ten years. A legal owner is the person or entity that holds the money.

It shows which owner's cash runs short first, if any, because in this model one owner's balance does not cover another's shortfall.

The future cashflow projection follows the period you enter, with the recorded work income end ages and the funding accounts you select. Current cashflow answers a shorter question: what an average month this financial year leaves.

The future cashflow projection guide and the cash flow and forecast guide explain each view.

How do I read a shortfall or an end balance?

In the future cashflow projection, Cash runs out is the first day a person's cash falls below zero after the monthly top-up from their included accounts. A year-end balance can still be positive after an earlier shortfall, so the yearly chart alone does not rule one out.

Cumulative funding gap is the spending across the plan that cash and the funding sources could not meet. It is a modelled shortfall, not an amount to draw or borrow. Closing cash is the money left in the spending accounts at the end.

Closing net position is wider: it includes property and other assets the model has not turned into cash, so not all of it can be spent. The post on property equity and future cashflow explains why.

Which assumptions change the answer?

Until you change them, PropRetire's results assume income, rent and spending grow 3% a year and super has a net return of 8%. A saved plan can use its own rates, and a result belongs with the settings that produced it.

The 8% is a yearly return on super and other investments that the plan opens with. The plan covers what is recorded, so a cost left out of the records is left out of the result.

What is easy to misread?

• A missing figure is not zero. The forecast marks a figure it cannot calculate as unavailable and says why, and the plan names missing records instead of treating an unfinished plan as an answer.
• A combined cash total can hide one owner's shortfall. The plan has a Cash by participant view for that reason.
• The age cash lasts to is the work income end age plus the years until cash first falls below $0. If it never does, it is the age where the calculation ends.

Which records let me check the result?

The result starts from your records, so check these against their documents.

• Bank and offset balances, each with its date and ownership share.
• Loan statements, with repayments and any change of terms.
• Rental statements and property bills, including costs paid less often than monthly.
• Super and investment balances, beside the accounts included in the plan.
• Income and the household spending entered, and each person's work income end age.

The property records checklist shows how to keep the documents and their dates together.