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Monthly spending

Monthly spending sets the size of the target.

Monthly spending is the household-cost number annualised before sizing the required portfolio.

Question this answersHow does monthly spending set the amount the portfolio needs to cover?
Simple termsEstimate, not adviceUses your entered inputs
  1. 01
    What it means

    Start with the plain meaning.

  2. 02
    How it affects the year

    See why the estimate can move.

  3. 03
    What to check

    See what the estimate leaves out.

Why this matters

What this means.

Spending sets the income the portfolio is expected to replace. Because the target is based on annual spending, this input has a direct link to the pot size.

Year impact

How this can move the year.

Higher spending raises the required portfolio and can move the Financial Independence Year later. Lower spending lowers the target and can move the year earlier.

How it is used

How the calculation uses it.

The calculation treats monthly spending as a steady amount in today’s money, then annualises it before sizing the target portfolio.

Estimate limits

What can make the estimate change.

Housing, dependants, healthcare, lifestyle, one-off costs, or later-life spending may differ from the monthly amount entered.

Checks

Checks before you use the number.

Use these prompts to read the estimate carefully. They are not recommendations.

  • Check whether irregular annual costs are reflected in the monthly figure.
  • Check whether housing and debt payments are represented consistently.
  • Check whether the figure reflects the spending level you want to test.

Read next

Read one assumption at a time, then use the calculator when you want to test the inputs.

Next in this path 2 of 5Withdrawal rateA withdrawal rate is the percentage assumption used to translate annual spending into a target portfolio number for the Financial Independence Year.

Related assumptions

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