About

Every pension fund that promises an income runs on one question. Are the assets enough to cover the liabilities? Not what the portfolio might return, but what the promised spending costs, and whether the balance sheet covers it. Defined-contribution plans dodged the question by handing the liability to you. That is why you now need the same arithmetic.

Pricing a stream of life-contingent payments is a classic actuarial problem. Discount for the time value of money, and weight each payment by the odds of being alive to spend it. Actuaries have priced obligations this way for a century, and the discipline has seventy years of finance theory behind it, from Modigliani's lifecycle hypothesis (1954) through Merton to Campbell & Viceira. What it has almost none of is retail expression.

Am I Funded is that expression. The essays teach the frame. The free retirement calculator prices what your spending costs off today's rates and tells you your funded ratio.

In plain terms, will your savings fund your retirement, every year, adjusted for inflation, for as long as you live? That is the question the funded ratio answers. Above 100%, your retirement spending is covered at today's prices. Below it, you can see the size of the gap in years of spending.

That unit is the whole reframe, and it is worth saying plainly. A funded ratio is not a pot of dollars. It is the share of your spending your assets can actually pay for, every year, for as long as you live. At 100%, all of it is covered at today's prices. At 80%, four fifths of it is, and the shortfall stops being an abstraction, because the calculator prices it as a number of years of spending you are short.

It turns a vague worry, "do I have enough?", into a question with an answer. Am I funded? A number you can act on is worth more than a pot you can only watch.

A word on what is and is not being claimed. Funds answer that question with wildly different discount rates. US public plans use their expected return on assets, around 7%, while UK and Dutch schemes price much closer to a market curve. So this site does not say "measure it as pension funds do," because they do not agree.

It says to price the liability the way an actuary prices any life-contingent obligation, and to use the real yield curve, meaning interest rates after inflation, because that is the rate at which you can actually lock in future purchasing power. Post 12 argues that case at length.

How this works

1. You enter spending and any state benefit in after-tax terms, because that is the figure you recognise from your own bank account. The engine then measures in real, pre-tax terms throughout, so every number on screen sits in today's purchasing power and no tax rate is assumed anywhere in the arithmetic.

2. Each future year of spending is weighted by the odds of being alive to spend it, using the national life table published for your country. Those tables describe death rates as they were when they were measured, so they are projected forward on the official best-estimate improvement rates published alongside them. Your spending pays across decades in which mortality keeps improving, and pricing it on today's rates alone would understate what it costs.

3. Your state benefit is weighted the same way and then netted off the liability rather than added to your assets, because it is income you can never deploy as capital.

4. Those weighted payments are discounted at the real rate for their own maturity, read off the published real yield curve, not at a single average rate applied to all of them. Near years and far ones are priced differently because the market prices them differently. Your result names the curve it used and the date that curve was struck.

5. One seam in that comparison is worth naming. Your spending goes in after tax, because that is the figure you recognise, and the assets that have to meet it are priced at the pre-tax rates the market quotes. Those two meet inside a tax-sheltered account, where returns are not taxed as they accrue.

   They do not meet in a taxable account. There, tax on the return lowers what you keep, so the same money funds less of your spending than the pricing assumes and your funded ratio is lower than the number on screen.

   No tax is modelled on the free calculator. The rules vary too much by country and by account type to do it generically and stay honest. If your money is fully or partly in a taxable account, read the funded ratio as an upper bound rather than a forecast.

Measured amounts are shown to the nearest thousand, because a price struck on a days-old curve and population mortality does not resolve any finer than that. That includes the summary under your result, whose rows are worked out from the rounded figures so they still add up. The year-by-year tables stay exact, published pension rates are shown as published, and anything you entered is echoed back exactly as you typed it.

Fair questions

Is this financial advice?

No. The instrument measures; the education generalises; nothing here prescribes a product or considers your personal circumstances.

Is this another retirement simulation?

No cones and no success probabilities. A simulation does something real that this does not, which is put a number on sequence risk by running the order of returns many times over. What it cannot do is tell you what is wrong when the answer comes back thin, because a probability has no parts to inspect. This measures against today's prices instead, and shows the parts.

What about a market crash just after I retire?

A crash shows up here at once, as a lower ratio. Your money fell and what your spending costs did not, so the two move apart and the number says so the day it happens. The risk that carries no number here is sequence risk, which is what you hold when the assets funding your spending are not the assets your spending is priced in. It is largest in the first retirement years, because those are the years you cannot wait out.

So how do I protect against it?

The pension fund answer is to match the spending you cannot afford to expose and take market risk with the surplus. Which years to match is a measurement, and this site will make it. What to hold is not a measurement, and this site will not tell you.

Does this allow for tax?

Not on the free calculator. Your spending and your state benefit go in after tax, because those are the figures you recognise, and the assets that meet them are priced at the pre-tax rates the market quotes. Inside a sheltered account those are the same comparison. If your money sits in a taxable account, read the ratio as an upper bound.

Is the answer guaranteed?

No. A funded ratio moves when interest rates move. What it offers is clarity about where you stand, not a guarantee about where you'll end up.

Do you store my financial data?

No. Your figures are sent to the server, used to compute the result, and discarded in the same request. Nothing is written to a database, a log, or an analytics event. If you share your result, the link carries the ratio itself and nothing else.

Is this endorsed by an actuarial body?

No. This applies actuarial principles; it has not been reviewed or endorsed by the Society of Actuaries or any other actuarial body, and nothing here is an actuarial opinion.

Is this what an annuity would cost?

No. The liability is weighted by population mortality, so it is an expected present value, not what an insurer would charge to guarantee the same income. Annuities are priced on annuitant mortality, plus a margin, and cost materially more. The funded ratio asks whether you can fund your spending yourself.

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