Assumptions & Sources

This is a hypothetical illustration, not a prediction or a guarantee. Every assumption — including the advisor value-add rates, which default to the published research estimates below — is adjustable in the inputs panel, and results change materially with them.

1. Annual return premium (default 1.5%). Estimates of the value a professional financial advisor may add vary by study, methodology, and individual circumstances. Vanguard’s Advisor’s Alpha research ("Putting a Value on Your Value," Kinniry et al., 2022) estimates advisors following its framework can add up to, or even exceed, 3% per year in net returns — with behavioral coaching, the largest component, estimated at roughly 1.00%–2.00% per year — while cautioning that this value is not earned evenly each year and tends to arrive during periods of market stress or exuberance. Consistent with this, a study of about 723,000 401(k) participants found those using professional help earned median annual returns 3.32 percentage points higher, net of fees, than self-directed participants over 2006–2012 (Aon Hewitt & Financial Engines, 2014), and peer-reviewed research found self-directed investors trailed the market by more than 1 percentage point per year on average (Barber & Odean, Journal of Finance, 2000). The 1.5% per year default reflects the behavioral-coaching component of these estimates and can be adjusted in the inputs panel; actual results may be higher or lower. Sources: Vanguard, "Putting a Value on Your Value: Quantifying Advisor’s Alpha" (2022); Aon Hewitt & Financial Engines, "Help in Defined Contribution Plans" (2014); Barber & Odean, "Trading Is Hazardous to Your Wealth," Journal of Finance (2000).
2. Annual tax savings (default 0.8%). Tax-related value from professional advice depends heavily on how much of your portfolio is in taxable accounts, your tax bracket, and whether you are drawing income from the portfolio. Peer-reviewed research estimates that a systematic tax-loss-harvesting strategy applied to large-cap U.S. stocks from 1926 to 2018 would have produced approximately 0.82% per year of additional after-tax return after accounting for the IRS wash-sale rule (Chaudhuri, Burnham & Lo, Financial Analysts Journal, 2020). Vanguard’s research similarly estimates 0% to 0.60% per year from tax-efficient asset location and up to 1.20% per year from tax-efficient withdrawal sequencing, with 0% for investors whose assets sit entirely in one account type. Investors with little or no taxable-account exposure should expect a smaller benefit. Sources: Chaudhuri, Burnham & Lo, "An Empirical Evaluation of Tax-Loss-Harvesting Alpha," Financial Analysts Journal 76(3) (2020); Vanguard, "Putting a Value on Your Value" (2022).
3. Advisor fee (default 1%). The default 1% annual advisory fee reflects the median asset-based fee reported in industry surveys for portfolios up to $1 million; typical fees decline at higher asset levels (roughly 0.85% above $1 million and 0.50% above $5 million). Your actual fee may be higher or lower depending on the services provided and how your advisor charges. Enter the fee an advisor would actually charge you. Sources: Kitces Research / Inside Information advisory-fee surveys.
4. Investment growth (defaults 8% working years, 5% in retirement). The pre-retirement growth default is rounded from the S&P 500’s annualized total return, with dividends reinvested, from January 2000 through 2024 — approximately 7.6% (NYU Stern historical returns data). That window opens just before two major market downturns and is below the roughly 10% per year U.S. large-cap average since 1928, making it a conservative baseline. The retirement-phase default is rounded from the average yield on Moody’s Seasoned Aaa corporate bonds over the same period, approximately 4.8% (Federal Reserve Bank of St. Louis, FRED series AAA), assuming a shift to a more conservative allocation. Past performance does not guarantee future results. Sources: Damodaran, NYU Stern, "Historical Returns on Stocks, Bonds and Bills: 1928–2025"; Federal Reserve Bank of St. Louis (FRED), Moody’s Seasoned Aaa Corporate Bond Yield.
5. Inflation (default 3%) and savings rate (default 6%). The inflation default is rounded from the average annual change in the Consumer Price Index for All Urban Consumers (CPI-U) from 2000 through 2023 — approximately 2.56%, per the U.S. Bureau of Labor Statistics; recent inflation has run higher, and your income and contributions are assumed to grow at this rate. The savings-rate default is rounded from the average U.S. personal saving rate — personal saving as a percentage of disposable personal income — over the same period, approximately 5.69%, as published by the U.S. Bureau of Economic Analysis. That average is lifted by unusually high pandemic-era saving; individual savings behavior varies widely. Sources: U.S. Bureau of Labor Statistics, CPI-U (FRED series CPIAUCSL); U.S. Bureau of Economic Analysis, Personal Saving Rate (FRED series PSAVERT).
6. Withdrawal rate (default 4%). A 4% initial withdrawal, adjusted for inflation, is a common rule of thumb derived from William Bengen’s 1994 study in the Journal of Financial Planning and the 1998 Trinity Study, which tested withdrawal rates against U.S. market history since 1926. More recent research places sustainable starting rates in a range around this figure — Morningstar’s current analysis supports about 3.9% for a 30-year retirement, while Bengen’s updated work supports up to 4.7%. Sustainable rates depend on portfolio mix, horizon, market conditions, and spending flexibility. Sources: Bengen, "Determining Withdrawal Rates Using Historical Data," Journal of Financial Planning (October 1994); Cooley, Hubbard & Walz ("Trinity Study"), AAII Journal (February 1998); Morningstar, "The State of Retirement Income" (2025).
7. Projection horizon (to age 85). The projection runs from your current age to age 85, and the summary reports the value added at the 5-, 15-, and 30-year marks (those that fit before the horizon) along with the ending totals at age 85. If your retirement age equals your current age — or is already behind you — the whole projection runs in the withdrawal phase. The advisor relationship is assumed to continue for the entire projection — advisory fees, the estimated return premium, and the estimated tax savings all apply every year.