How Planafolio calculates your retirement provision
Every calculator on this site — pension gap, withdrawal, Frühstart-Rente — runs on the same calculation logic. Here's the full explanation, no black box.
- Model version
- 3.0
- Assumptions reviewed on
- 30 Sept 2026
- Last model change
- 29 Sept 2026
Planafolio projects your capital from today to retirement using your own savings rate and return assumption, then compares it to the capital needed for your desired income, accounting for inflation, the statutory pension, and simplified tax rates. On top of that, a Monte Carlo simulation runs 500 randomized return paths to show how much the outcome can vary by market conditions; from it (Pro) comes a model-based success probability per scenario — explicitly a model statement, not a forecast.
Plan coverage
How plan coverage is calculated
Plan coverage compares what you will have available each month in retirement with what you need – both in the first year of retirement. Available means your net pensions (state, company and private pensions, net rent) plus the sustainable withdrawal from your portfolio: the highest inflation-rising amount that lasts until your assumed life expectancy at your return assumption. From 100% the plan counts as "on track", 85–99% as "tight", below that as a "gap". The figure is rounded to whole percent; amounts can be shown in today's money. For Pro, Planafolio also shows a range from two scenarios: cautious (return 2 percentage points lower, inflation 1 point higher, life expectancy 3 years longer) and optimistic (return 2 points higher, inflation 0.5 points lower).
Return assumption
A number you enter yourself
There's no hidden default return. You enter your expected annual return directly (for broadly diversified equity ETFs, 6–8% nominal is often cited as a long-term guide, less for more conservative mixes — an assumption, not a promise), and the calculator projects your capital forward using exactly that value — held constant across the whole accumulation and withdrawal period.
Inflation
Purchasing power, not just the account balance
You enter your desired income in today's purchasing power. During the withdrawal phase, the monthly payout rises each year by the inflation rate you set, so you can afford the same real amount at the end as at the start — not just the same nominal figure. The statutory pension is deliberately not inflated further, because in Germany it's wage-indexed rather than CPI-indexed.
Making uncertainty visible
Monte Carlo simulation and success probability (model-based)
The deterministic projection assumes a constant return — real markets fluctuate year to year. The Monte Carlo simulation runs 500 randomized return paths whose middle path (median) follows your expectation (5 market environments from "very cautious" to "very optimistic", each with its own volatility) and shows you a range (10th/50th/90th percentile) instead of a single number. The model-based success probability (Pro) counts in how many of 500 lifetime paths — saving and withdrawal, 15% annual volatility — your wealth lasts to life expectancy at your desired withdrawal; per scenario cautious (return −2 pp, inflation +1 pp, life expectancy +3 years), base and optimistic (return +2 pp, inflation −0.5 pp). It never stands alone but comes with assumptions and a range: the random returns include rare, severe crisis years (fat tails, never below −100%), but consecutive years are independent in the model — real markets are not. The success probability (model-based) describes the model, not the future. The random paths are reproducible: identical inputs give the same result; only changed inputs draw new paths.
Withdrawal order
Why the order of returns matters
A crash shortly after retirement hurts more than the same crash ten years later, because you're already withdrawing capital during the loss phase (sequence-of-returns risk). That's why Planafolio by default models a cash buffer covering 24 months of withdrawal needs as an assumption, which can cushion crash years, while the statutory pension and fixed income form the base and your portfolio only covers the rest — including the annual €1,000 Sparerpauschbetrag tax allowance.
Taxes
Simplified but realistic rates
Capital gains are taxed by default at 26.375% (capital gains tax plus solidarity surcharge), with the annual €1,000 tax-free allowance applied automatically. For the statutory pension and annuity payouts, the calculator applies a simplified rate approximating Germany's phased-in pension taxation — not an individual assessment, but far closer to reality than "tax-free".
Health Score
How the Health Score is calculated
The Health Score (0–100, Pro) is the weighted average of 6 dimensions of your portfolio: diversification (20%), concentration of the largest position (20%), home bias (15%), fund overlap (10%), risk & stability from volatility and maximum drawdown (20%) and crisis resilience in historical crisis scenarios (15%). If a dimension has no basis — for example no overlap without two funds — the remaining weights are scaled up. A single position of up to 10% of the portfolio gets the full concentration score. Verdict: from 75 points “Excellent”, from 55 “Solid”, from 35 “Room to improve”, below that “Risky”; the same thresholds label each dimension as good, medium or improvable, and below 70 a dimension counts as an issue. “Why?” lists the dimensions that cost the most points (weight × missing points), the costliest first — it is the biggest lever. Market-normal facts such as the US weight in the world index are not penalised. The score is an orientation, not investment advice.
Data quality
How reliable are your numbers?
Data quality (0–100) combines 10 checks that also appear individually as data notes: current prices (weight 25, share of exchange-priced positions whose last price is at most 5 days old), currencies (10, bookings in portfolio currency; even one unconverted booking costs at least half), deposits (5, portfolios with buys and at least one deposit), imports (10, rows read in the last 60 days), freshness (5, portfolios with a booking, sync or savings plan in the last 35 days), cost basis (10, open positions with a cost basis or with a buy or transfer in), bookings (15, open positions whose share count equals the sum of their bookings; a single contradiction already costs at least half), possible duplicates (10, share of bookings without a twin with the same portfolio, day, security, type, amount and quantity), price source (5, exchange-priced positions that have an ISIN, a price symbol or at least one price) and estimated values (5, share of positions whose value is not self-entered — e.g. real estate). Score = sum of weight × share fulfilled, scaled to the checks that could be measured. Levels: from 90 “Very good”, from 75 “Good”, from 50 “Review”, below that “Critical”. A check without a basis — e.g. no imports — counts as fulfilled. Each check also carries a status: "Passed", "Note" (estimated values and possible duplicates – not an error, just less reliable), "Open" or "Critical" (a share count contradicts the transactions, or at least half of the market-priced positions have no current price). A critical check caps the level at "Review", an open one at "Good" – the score itself is unchanged.
Limits of this model
What this model can't do
This is a simplified model, not individual financial, tax, or pension advice. It doesn't know about future tax reforms, irregular cash flows, or your personal life expectancy — only statistical assumptions. Use the results as orientation, not a guarantee.
What influences the result?
Four levers decide whether your capital lasts in the simulation. This only states the direction of each effect, with no figures and no recommendation.
Savings rate
A higher savings rate raises the capital at retirement, a lower one reduces it. The effect grows with the number of years remaining.
Retirement age
A later retirement lengthens the saving phase and shortens the withdrawal phase; an earlier one does the opposite.
Return assumption
A higher assumed return makes the capital grow faster in the simulation, a lower one slows it. The return is an assumption, not a forecast.
Expenses in retirement
Higher desired expenses increase withdrawals and shorten how long the capital lasts; lower ones ease the load.
Sources
What the assumptions are based on
Tax rates: German Income Tax Act (capital gains tax, Sparerpauschbetrag). Pension taxation: German Federal Ministry of Finance. Pension level and life expectancy: German Pension Insurance (Deutsche Rentenversicherung), Federal Statistical Office (Destatis).
Official sources for the assumptions
- § 32d EStG – Abgeltungsteuer
- § 20 Abs. 9 EStG – Sparer-Pauschbetrag
- § 20 InvStG – Teilfreistellung
- § 22 EStG – Besteuerung der gesetzlichen Rente (im Rechner pauschal)
- § 64 SGB VI – Rentenformel der gesetzlichen Rente
- Deutsche Rentenversicherung – Renteninformation
- Statistisches Bundesamt – Verbraucherpreisindex für Deutschland
Try it yourself
The calculators that use this methodology
Frequently asked questions
Questions about the methodology
That depends on your investment strategy — for broadly diversified equity ETFs, around 6–8% p.a. nominal is often cited as a long-term guide (depending on index, period and currency), more conservative equity/bond mixes correspondingly less. The calculator doesn't make an assumption for you; try several values and compare against the Monte Carlo range.
The deterministic projection assumes exactly your set return every year — useful for quickly playing with numbers. The Monte Carlo simulation lets the return fluctuate randomly around that value each year, giving you a more realistic range of possible outcomes instead of a single line.
No. It's a model calculation based on the values you enter, and doesn't replace individual financial, tax, or pension advice.
Apply this methodology to your own portfolio
Import your portfolio and run your retirement planning with your real numbers — get started for free.
Get started for free