How the financial runway calculator works

The four inputs

Savings means cash you are willing and able to spend. Investments means money included in this scenario and accessible when savings are gone. Monthly income and monthly spending should use the same before-tax or after-tax basis so the difference between them is meaningful.

The calculator treats negative, missing or invalid values as zero. It does not ask for a currency because the arithmetic works the same in any currency, although the current interface displays a dollar sign.

The monthly gap

Monthly income minus monthly spending is the starting point. If the result is positive, the page reports how much is being added each month. If it is zero, the balance is stable under these assumptions. If spending is higher, the difference is the amount the available money must cover each month.

Month-by-month drawdown

For every projected month, investments first receive one month of compound-equivalent growth. The monthly shortfall is then taken from savings. Once savings reach zero, any remaining shortfall comes from investments. The final partial month is kept, then the displayed duration is rounded down to avoid overstating the answer.

The calculation stops at 60 years. If the balance has not run out by then, or investment growth covers the shortfall on its own, the page describes the runway as not running out instead of pretending to provide precise dates decades ahead.

The 5% investment assumption

Investments are assumed to grow at a constant nominal rate of 5% a year, converted to its compound-equivalent monthly rate. Five percent is an illustration, not a forecast. Real returns vary, can be negative, and do not arrive smoothly each month.

Savings receive no interest. The model also ignores tax on investment gains, account restrictions and selling costs. If those details matter to a decision, this calculator is too simple for that decision.

What “without income” changes

The button on the result keeps savings, investments and spending unchanged and sets monthly income to zero. It does not assume severance, benefits, a partner’s income, spending cuts or a future return-to-work date. You can approximate continuing income or lower spending by editing those two inputs yourself.

What is not modelled

The estimate deliberately leaves out details that would imply more confidence than this small calculator can support.

• inflation or spending that changes over time
• market volatility and sequence-of-returns risk
• tax, fees or penalties on withdrawals
• debts, minimum payments and interest
• one-off costs, emergencies or future purchases
• different return rates for different investments
• pensions, Social Security or account-access rules

A worked example

The page opens with $30,000 in savings, $80,000 in investments, $7,000 of monthly income and $4,000 of monthly spending. At first, income exceeds spending by $3,000 a month. Removing the income produces an estimated runway of about 2 years and 5 months under the assumptions above.

That result is useful as a baseline. Changing spending or adding temporary income shows how much each choice moves the answer. It is not a guarantee that the same balances will follow that path.