How to Build a Year-by-Year Retirement Wealth Plan
Turn an abstract retirement goal into a concrete, year-by-year roadmap you can track and adjust.
Retirement planning is often reduced to a single number: the amount you need before you stop working. But a lump-sum target tells you very little about the journey. A year-by-year wealth plan breaks that journey into manageable steps, showing exactly how your net worth should evolve from today until the end of your planning horizon.
Why year-by-year?
A single target number can't show you when investment returns start outpacing contributions, when you'll cross your first $100K, or whether your portfolio survives a downturn in year 3 of retirement. A timeline can.
The Two Phases of Every Plan
Accumulation vs. Drawdown Phases
Every retirement plan divides into two phases:
- Accumulation — Your working life. Wealth grows through contributions + investment returns. The earlier you start, the more compounding works in your favour.
- Drawdown — Retirement. Contributions stop, withdrawals begin. Your portfolio must generate enough to cover expenses while preserving capital. Sequence-of-returns risk becomes the central concern.
A good plan models both phases explicitly so you can see the inflection point where your portfolio transitions from growth to distribution.
Key Inputs
You don't need perfect precision — reasonable estimates produce a useful plan:
| Input | What to Enter | Typical Range |
|---|---|---|
| Current savings | All invested assets you'll draw from | Varies |
| Annual contributions | How much you save per year | $5K – $50K+ |
| Expected return | Long-term average for your portfolio | 5% – 8% real |
| Inflation rate | Erodes purchasing power over time | 2% – 3% |
| Pension / Social Security | Guaranteed income in retirement | $0 – $30K+ |
| Retirement age | When you plan to stop working | 40 – 67 |
| Life expectancy | How long to plan for (err on the long side) | 85 – 95 |
Building the Projection
With inputs in hand, the projection follows a straightforward formula applied year after year:
- During accumulation: Ending balance = Last year's balance + contributions + investment returns on the combined amount.
- During drawdown: Contributions are replaced by withdrawals, and pension income offsets part of spending.
The result is a table — or better yet, a chart — showing your projected wealth for every single year. You can immediately see whether your portfolio survives the entire horizon, identify the peak value, the year withdrawals outpace returns, and the decline rate in later life.
What the chart reveals
The most powerful insight is often the crossover point — the year when your investment returns exceed your annual contributions. After that, compounding does the heavy lifting and your wealth curve steepens dramatically.
Dealing with Uncertainty
No projection predicts the future perfectly. The goal isn't accuracy — it's a baseline you can reason about and adjust.
Run multiple scenarios
Create a base case, an optimistic scenario (higher returns, lower inflation), and a pessimistic one. If the pessimistic case works, you're in great shape.
Build a margin of safety
Aim for a portfolio that exceeds your minimum requirement by 10–20%. This buffer absorbs shocks without forcing you back to work.
Use Monte Carlo where possible
Running your plan through 1,000 randomized return sequences gives you a probability of success — far more informative than a single line on a chart.
Adjusting Over Time
A wealth plan is a living document. Revisit it at least once a year:
- Update your current balance with actual figures.
- Adjust contributions if your income changed.
- Revise return expectations if your allocation shifted.
Life events — a job change, inheritance, market crash, new child — are natural triggers for a review. When something significant changes, re-run the projection to see how it affects your timeline.
Keep a historical record
Save your projections each year. Comparing what you predicted five years ago vs. what actually happened helps you calibrate future estimates more accurately.
Exporting Your Plan
A year-by-year plan is most useful when you can share it, print it, or compare it against previous versions. Exporting to a spreadsheet lets you annotate it, discuss with a partner or financial adviser, and track how reality compares to the plan over time.
Get Started
The best time to build your plan is today. You don't need perfect information — start with your best estimates and refine as you go. The act of mapping out your financial future, year by year, transforms retirement from a vague aspiration into a structured, achievable objective.
Build your personalised year-by-year retirement roadmap in minutes. Export to Excel.
Create Your Wealth Plan →Run 1,000 Monte Carlo simulations to stress-test your retirement plan and find your safe withdrawal rate.
Try the FIRE Calculator →