Assumptions & methodology

RetireConfident is a planning tool, not a financial product. Understanding what the model assumes — and where it simplifies reality — is essential for interpreting your results.

Last updated: April 2026 · Age Pension rates current to 20 March 2026 indexation

Accumulation engine

Architecture
Year-by-year simulation from current age to retirement age. Each year: select career phase → apply wage growth → calculate employer SG → calculate concessional contributions (with carry-forward) → apply 15% contributions tax → apply Div 293 → apply NCCs and bring-forward → apply investment return (interpolated if glide path) → deduct fees → apply Div 296 → grow non-super account.
Contribution timing convention
Contributions are applied before the investment return each year (start-of-year convention). This means contributions earn a full year's return in the year they are made. The mid-year convention — where contributions arrive evenly throughout the year and earn approximately half a year's return — would be marginally more accurate for monthly payroll and quarterly SG cycles, but the difference is small relative to the opening balance and is a common simplification in annual projection models.
Career phases
Multiple phases can be defined, each with a start age, salary, SG rate, and contribution amounts. The engine selects the phase with the highest start age ≤ current age each year. Wage growth is applied from the phase's start age.
Concessional cap
$30,000/yr (2025–26). Employer SG plus personal concessional. If contributions exceed the cap, the excess is counted as NCCs. Maximise concessional option automatically tops up to the cap minus employer SG each year. ⚠ Model limitation: the cap is held at the 2025–26 value for the first year and then projected forward using a fixed long-run AWOTE rate of 3.5% p.a. in $2,500 increments — consistent with RBA and Treasury long-run estimates. This is independent of the user's personal wage growth setting. In practice the cap rises by government decision and may not match this projection in any given year.
Carry-forward
Unused concessional cap from the prior 5 financial years, available when TSB < $500,000. User enters per-year amounts from ATO MyGov. The engine depletes oldest years first (FIFO). Entries older than 5 years at simulation start are discarded.
Contributions tax
15% flat rate on all concessional contributions. Applied before balance update.
Division 293
Additional 15% tax on concessional contributions if income (salary + concessional) exceeds $250,000. User selects whether deducted from super or paid from other income. The $250,000 threshold is legislatively frozen — there is no indexation mechanism — and has been unchanged since 2012. The model treats it as permanently static, which is correct under current law.
Non-concessional cap (NCC)
$120,000/yr (2025–26). Regular NCC and lump-sum contributions share this cap. Bring-forward contributions override this cap in the trigger year. The NCC cap, bring-forward cap ($360k), and all TSB-relative bring-forward thresholds are derived from the projected concessional cap (NCC = 4× CC) and Transfer Balance Cap, and rise with them over the projection using the same fixed AWOTE and CPI rates.
Bring-forward rule
Allows up to 3 years' NCC cap in a single trigger year. Allowable limit gated by TSB at trigger age: full 3-year ($360k) if TSB < $1,760,000; 2-year ($240k) if TSB < $1,880,000; standard 1-year ($120k) if TSB < $2,000,000; $0 if TSB ≥ Transfer Balance Cap ($2,000,000). NCC cap locked to $0 for 1 year (2-year bring-forward) or 2 years (3-year bring-forward) after the trigger.
Downsizer contribution
One-off, exempt from NCC cap. Available from age 55. Capped at $300,000 per person. Applied to super in the trigger year before the investment return step.
Government co-contribution
ATO matches 50c per $1 of NCC up to $500/year. Full $500 if income ≤ $47,488; phases out linearly to zero at $62,488 (2025–26 thresholds, indexed annually). Applied automatically when eligible.
Division 296
Enacted, effective 1 July 2026: tiered additional tax on notional super earnings. Extra 15% on earnings attributable to TSB above $3M (combined 30%); extra 25% on earnings attributable to TSB above $10M (combined 40%). Thresholds CPI-indexed. Marked with disclaimer in the UI.
Investment return
Applied to the post-contribution, pre-fee balance. Flat rate when glide path off; linearly interpolated from start to end rate when on (lerp). Same interpolation applied to MC volatility.
Fund fees
Three components deducted after investment return: (1) investment fee (% of post-return balance); (2) flat annual admin fee ($); (3) insurance premium ($). All default to $0.
Non-super account
Grows at the user's specified post-tax return rate. Same lognormal z-value as super in MC runs (correlated returns). Annual contribution added each year before return.

Projection Monte Carlo

Distribution
Lognormal draws using Box-Muller transform. Mean = (expectedReturn/100 − σ²/2), σ = volatility/100 per year.
Glide path in MC
Per-year μ and σ interpolated between start and end values using the same lerp as the deterministic engine.
Correlation
Super and non-super use the same z-value per year — positively correlated but not identical returns.
Output
P10/P25/P50/P75/P90 per year at retirement for super, non-super, and combined. 1,000 simulations by default.

Gap analysis engine

Architecture
Binary search on three separate dimensions, each holding all other inputs constant (including partner balance, which is always fixed at user input).
Extra NCC per year
Searches in $100 steps from $0 to $120,000 — the minimum additional NCC needed to reach the target balance.
Earliest retirement age
Searches from currentAge+1 to 80 — the earliest age at which the target balance is reached.
SG boost equivalent
Searches in 0.1% steps from 0% to 15% — the additional SG rate that would close the gap.
Bridge analysis
Compares non-super balance at preservation age against (annualIncome × bridgeYears). Signals whether non-super covers spending from early retirement to age 60.
Preservation age
Fixed at 60 (current legislated age).

What the Projection Calculator does not model

  • Transition to retirement (TTR) income streams
  • Defined benefit accumulation schemes
  • Spouse contribution splitting
  • SMSF-specific rules
  • Capital gains tax on non-super assets
  • Age Pension interaction during accumulation phase
  • Multiple bring-forward windows in the same projection
  • Forward indexation of concessional cap and Transfer Balance Cap is approximated using fixed long-run AWOTE (3.5%) and CPI rates respectively — actual annual government decisions may differ

How the model works

Year-by-year simulation
The model runs one year at a time from retirement. Each year: apply investment returns → receive income → calculate spending → fund spending from accounts → apply Age Pension means test → record results.
Annual time steps
The simulation uses annual (not monthly) time steps. Intra-year timing is not modelled. This is standard for long-horizon retirement planning models.
The three accounts
Cash account (overflow buffer, earns cash return rate, accessed first); Sequencing buffer (deliberate defensive reserve, earns cash return rate, accessed second); Main super (primary growth portfolio, minimum drawdown rules, accessed last).
Withdrawal waterfall
Each year, spending is funded in strict order: (1) Cash account, (2) Sequencing buffer, (3) Super and/or non-super investments. Super is inaccessible before preservation age (60).
Non-super investments
When enabled, tracked alongside super. Returns scaled proportionally to super in historical and MC modes. Subject to Age Pension deeming and assets test each year.
Downsizer contribution
At the configured age, contribution added to super, remaining proceeds to non-super account, homeowner status updates — all before the Age Pension means test for that year.
Income floor first
All fixed income (defined benefit pension, Age Pension, other income) applied before drawing from the portfolio. Only the shortfall is funded from accounts.
Return application
Returns applied to main super balance at start of each year before withdrawals. Buffer and cash earn the separate cash return rate (default 3%).
Minimum drawdown
ATO requires minimum annual super withdrawals (4% at 60–64, rising to 14% at 95+). Excess above spending flows into the cash account.
CPI indexation
Spending, pension income, and Age Pension rates all indexed to CPI each year. ⚠ Model simplification: the legislated indexation for Age Pension payment rates is the higher of CPI or MTAWE (Male Total Average Weekly Earnings), not CPI alone. The model uses CPI only, which may understate Age Pension income in periods where wages outpace inflation. Asset test thresholds and income test free areas are CPI-indexed only, so those are correctly modelled.
Guardrails interaction
Guardrails adjust base spending — not minimum drawdowns, debt repayments, or aged care costs. The pension income floor prevents cuts below fixed income.

Simulation engine

Simulation horizon
Single mode: Modelled Death Age minus Retirement Age plus 1 year. Couple mode: Couple Horizon Years setting. Parametric MC with stochastic mortality: each run samples its own death age. Historical MC: always fixed 35 years. Formal stress test D1: fixed 45 years.
Fees
Not explicitly modelled. Reduce your expected return assumption by your estimated fee percentage (e.g. 0.5% fee on 7% return → set 6.5%). Typical Australian industry super fees: 0.5–1.0% p.a.

The simulation runs in nominal (future) dollars. Display mode is a presentation layer only — no effect on success rates or Age Pension calculations.

Age Pension (March 2026 rates)

Maximum rates
Single: $31,224/yr ($1,200.90/fn). Couple combined: $47,071/yr ($1,810.42/fn).
Asset test — homeowner
Full pension below $321,500 (single) / $481,500 (couple). Cuts out at $722,000 (single) / $1,085,000 (couple). Reduces $3/fn per $1,000 above lower threshold.
Asset test — non-homeowner
Full pension below $579,500 (single) / $739,500 (couple). Cuts out at $980,000 (single) / $1,343,000 (couple).
Income test free area
$5,668/yr (single), $9,880/yr (couple combined). Pension reduces 50c per dollar above threshold.
Deeming rates
1.25% on first $64,200 (singles; $106,200 couples), 3.25% above. Applied to all financial assets including super.
Work Bonus
$7,800/yr per eligible partner (employment/self-employment income only, age 67+). Unused amounts accumulate up to $11,800/person.
Eligibility age
67 (current legislated age).
Means test logic
Both asset test and income test applied each year — the result that produces the lower pension is used.

This is a simplified model for planning purposes. Actual entitlements are determined by Centrelink and may differ due to grandfathering rules and other factors not modelled here.

Superannuation

Minimum drawdown rates
4% (ages 60–64), 5% (65–74), 6% (75–79), 7% (80–84), 9% (85–89), 11% (90–94), 14% (95+). Applied annually regardless of spending needs.
Transfer Balance Cap
$2.0M (2025–26), rising to $2.1M from 1 July 2026. Super above this cap cannot be held in pension phase tax-free. ⚠ Model limitation: the TBC is held at $2.0M (or $2.1M post-July 2026) for the entire simulation. In practice the TBC rises in $100k CPI increments — over a 20-year projection it may reach approximately $2.6–2.8M. This means the model is slightly conservative for users near the current TBC with long horizons, as it overstates the portion of earnings subject to accumulation-phase tax.
Tax treatment
Super income stream is tax-free after age 60 in pension phase. Accumulation phase earnings taxed at 15%.
Pre-60 retirement
⚠️ Super cannot be accessed until you meet the conditions of release, usually not before the preservation age (60). The calculator enforces the preservation age — pre-60 spending must be funded from other sources.
Concessional contributions cap
$30,000/yr (2025–26). Fully modelled in the Projection Calculator — carry-forward, maximise flag, Div 293.
Non-concessional contributions cap
$120,000/yr (2025–26). Bring-forward rule allows up to $360,000 over 3 years. Fully modelled in the Projection Calculator.
Low-Rate Cap
$245,000 (2025–26). Applies to taxable component withdrawals before age 60. Not modelled — enter after-tax amounts if retiring before 60.
Division 293
Modelled in the Projection Calculator (accumulation phase). Not modelled in the drawdown simulation.
SAPTO / LITO
Effectively make income up to ~$32,279 (single) or ~$28,974 each (couple) tax-free for eligible pensioners. Modelled in super drawdown calculations.

Returns and inflation

Default CPI
2.5% per annum (user-adjustable 0–10%).
Parametric MC — distribution
Lognormal return distribution. Default: 6.5% mean, 10% standard deviation (balanced growth). Presets: Conservative (5%/8%), Balanced (6.5%/10%), Growth (8%/14%), High Growth (9%/18%).
AU Equities — XAOA
1980–2024 (45 years). Source: ASX/LSEG.
AU Balanced 60/40
1990–2024 (35 years). Composite of AU equities and bonds.
US S&P 500
1928–2025 (98 years). Source: Shiller/Yale CAPE data, Ibbotson SBBI.
Historical MC sampling
Block bootstrap (5-year blocks), shuffled years, or 35-year complete blocks.

Past returns are not indicative of future performance. Historical data is used to generate plausible return sequences — not to predict future markets.

Mortality

Source
Australian Bureau of Statistics Life Tables 2020–2022 (ABS 3302.0.55.001).
Default death age
Interpolated from ABS period life tables by sex and current age. Example: a 60-year-old male defaults to age 84; a 55-year-old female defaults to age 87.
Stochastic mortality (MC)
Each parametric Monte Carlo run samples a death age from a normal distribution centred on ABS life expectancy, SD = 10 years. Historical MC always uses fixed 35-year windows.

We recommend modelling to at least age 90. A 65-year-old today has approximately a 1-in-4 chance of living to 90.

Aged care

Probabilistic entry
Age-based probability derived from ABS mortality tables. Each Monte Carlo run independently draws an entry age and duration.
Deterministic entry
Fixed entry age specified by the user. Used in non-MC scenarios.
RAD (Refundable Accommodation Deposit)
Withdrawn from super at entry as a lump sum. Refunded to the estate on exit. Default: $400,000.
Annual ongoing costs
Basic daily fee plus means-tested care fee. Not refundable; indexed to CPI. Default: $65,000/yr. National median residential stay: approximately 3 years.

Spending model

Constant Real
Annual spending grows by CPI. Purchasing power maintained throughout retirement.
J.P. Morgan Curve
Based on Blanchett (2014) and J.P. Morgan (2024) research. Real spending declines 1.0% p.a. (years 1–10), 1.5% p.a. (years 11–20), 0.5% p.a. (years 21+). Aged care modelled separately.
Forgo Inflation modifier
Skips CPI uplift in years following a negative portfolio return. T. Rowe Price method. Morningstar 2025: lifts safe withdrawal rate from 3.9% to 4.3% at 90% success.
Guardrails (Guyton-Klinger)
Adjusts spending when withdrawal rate drifts above or below initial rate. Default: ±20% trigger, 10% adjustment. Morningstar 2025: supports 5.2% starting withdrawal rate at 90% success.

What the Retirement Readiness Calculator does not include

  • Investment fees (reduce your expected return assumption to approximate)
  • Centrelink Rent Assistance (relevant for non-homeowners)
  • State-based concessions and utilities discounts
  • Tax on investment income outside super
  • Future changes to legislation
  • Relationship breakdown or asset splitting
  • Business assets, trusts, or complex ownership structures
  • Franking credit refunds as a separate income stream (embedded in AU equity returns)
  • Transition to retirement (TTR) strategies
Not financial advice. RetireConfident is a modelling tool intended to help you think through retirement scenarios. It does not constitute personal financial advice under the Corporations Act 2001 (Cth). Always consult a licensed financial adviser before making financial decisions.