Forecasting uses assumptions about your income, expenses, accounts, and other factors to project your financial future. Forecasting is available in the Monarch web app. You can review and adjust these assumptions to reflect your situation and explore how different choices may affect your forecast.

Table of Contents

• High-level assumptions
• Account-level assumptions
  • Assets
  • Growth rates
  • Withdrawals
  • Splitting extra savings
  • Yearly paycheck contributions
• Liabilities
• Frequently Asked Questions
• Related articles

High-level assumptions

Your high-level assumptions are the baseline inputs that shape every year of your projection. To view or edit them, click Assumptions in the upper right to open the Assumptions sidebar.

Note: If you have fewer than 12 complete months of history, Forecasting averages only the complete months that had income or expense activity, then annualizes that average to a 12-month baseline (e.g., 3 months with activity → average those 3 months, then extrapolate). Months with no activity are skipped rather than counted as zero.

Participants

The participants included in your forecast are based on what you configure during the onboarding flow. Participants come from your household members — you can't add a participant who isn't one. If your household has more than one member, you can include additional participants, which unlocks separate retirement, Social Security, and end-of-plan events for each person.

If you add a new household member after your forecast is already set up, they'll automatically appear in the Participants section of your forecast assumptions — excluded by default, so your existing forecast isn't changed without your input. To include them, open the Assumptions sidebar (Assumptions in the top right), find their name under Participants, and toggle them on. Once included, Forecasting will create their default events (retirement, Social Security, end of plan, and an income source), which you can then configure.

Account-level assumptions

Assets

Growth rates

For each asset account included in your forecast, Monarch applies a default annual growth rate. You can adjust these individually by clicking on the settings icon next to the account name in the Accounts tab of the Forecasting table.

You can also customize how an account's growth rate changes over time. For example, you may want to model a more aggressive investment allocation earlier in your plan, then gradually reduce the growth rate as you get closer to retirement.

These defaults are based on historical averages and forward projection research. The 3% savings rate reflects expert projections for the average interest rate on cash savings in the US over the next decade. The 7% investment rate is based on what financial experts project for a diversified portfolio of stocks and bonds over the next 10 years (also called a "forward projection"). Real estate defaults to 3% — matching the inflation rate — because for most homeowners, a primary residence is a place to live, not an investment vehicle. The 3% inflation rate reflects the long-run historical average for US inflation, which has run closer to 3% over the past century than the ~2% seen through much of the 2000s and 2010s. Day-to-day checking accounts default to a 0% growth rate.

All rates are adjustable. If you expect different returns, or want to model a higher-inflation scenario, you can change any of these at the account level or in your high-level settings.

Please Note: Equity accounts are never included in Forecasting, regardless of their settings. Day-to-day checking accounts and credit cards that you pay in full each month are generally worth excluding from your forecast. Because Forecasting compounds balances over time, keeping short-term transactional accounts included can skew your projected net worth over the long run. To exclude an account, open its settings in the Accounts tab of the Forecasting table and turn on Exclude from forecast. You can also set account inclusion during Forecasting onboarding.

Changing an account's growth rate over time

Some accounts may not grow at the same rate for your entire forecast. For example, you might expect an investment account to grow more aggressively while you're younger, then more conservatively as you approach retirement.

To model this, open the account's settings in the Accounts tab and adjust the account's growth rate schedule. You can add future growth-rate points so Forecasting uses different rates in different years. Forecasting interpolates linearly between the points you set, so the rate transitions gradually rather than jumping at each point.

This can be useful for modeling a glide path, where an investment account gradually shifts from higher-growth investments to more conservative investments over time.

Withdrawals

Expense withdrawal order

When your projected expenses exceed your projected income in a given year, Forecasting draws from your available accounts in this default order:

1. Extra Savings
2. Cash accounts
3. Taxable brokerage accounts (default gain % at withdrawal: 80%; default tax % at withdrawal: 15%)
4. Tax-deferred accounts, such as traditional IRA, 401k, 403b, and 457 accounts (default tax % at withdrawal: 20%; early withdrawal penalties may apply before the account owner reaches the account's penalty-free age)
5. Roth accounts, such as Roth IRA and Roth 401k

If you have a mixed 401(k), 403(b), or 457(b) account, its pre-tax and Roth portions appear as two separate rows in the withdrawal order so you can order them independently.

You can change the withdrawal order by clicking the Edit assumptions icon in the upper right corner of the Forecasting page, and then clicking Change withdrawal order. You can also control when individual accounts are available for withdrawals from each account's settings.

Please Note: Withdrawal order controls the priority order Forecasting uses when multiple accounts are available for withdrawals. If an account's Withdrawal timing is set to Starting year or Never, Forecasting will only use that account when it is eligible based on that setting. If an account is set to Never, it won't be used to cover projected expenses, even if it is still included in your projected net worth.

Withdrawal timing

You can control when Forecasting is allowed to draw from each account when your projected expenses exceed your projected income.

To update this, open the Accounts tab in the Forecasting table, click the settings icon next to an account, and find the Withdrawals section.

Each eligible account can have one of the following withdrawal timing settings:

• Anytime — Forecasting can withdraw from this account whenever it is needed to cover a projected shortfall.
• Starting year — Forecasting will only begin withdrawing from this account in the year you choose. For accounts with early withdrawal penalties, the default starting year is based on the account owner's penalty-free age.
• Never — Forecasting will not withdraw from this account to cover projected expenses. The account can still be included in your projected net worth, but its funds won't be used for withdrawals.

This can be useful if you want to protect certain accounts from being used too early, model a specific drawdown plan, or keep an account included in your net worth without using it for living expenses.

Early withdrawal penalties

Some retirement accounts and HSAs may have early withdrawal penalties if Forecasting needs to draw from them before the account owner reaches a penalty-free age.

For penalty-eligible accounts, Forecasting uses two account-level settings:

• Early withdrawal penalty — The additional penalty rate applied when funds are withdrawn before the penalty-free age. Most penalty-eligible retirement accounts default to 10%; HSAs default to 20%.
• Penalty-free age — The age when withdrawals from the account are no longer treated as early withdrawals. Most penalty-eligible retirement accounts default to 59.5; HSAs default to 65.

Penalty settings may appear for account types such as 401k, 403b, 457b, Roth 401k, IRA, Roth IRA, SEP IRA, SIMPLE IRA, and HSA accounts. You can adjust the penalty rate and penalty-free age if needed.

If Forecasting withdraws from a penalty-eligible account before the penalty-free age, the projected withdrawal will include the penalty in addition to any withdrawal tax assumptions for that account. These penalties may appear in the Cash Flow and Accounts tables as a Withdrawal penalty line item.

Please Note: Early withdrawal penalty calculations depend on the account owner's age. If a penalty-eligible account is missing an owner, or the owner is missing a birthday, that account's balance will be held flat for the forecast instead of being projected, and it won't be used to cover shortfalls. The resulting gap shows up as unfunded expenses until the missing information is fixed.

There are two exceptions:

• If there is only one member in the Monarch household, Forecasting can infer the account owner automatically. That owner still needs a birthday.
• If the account's Withdrawal timing is set to Never, the account will still be included in projection math because Forecasting won't need to calculate a withdrawal penalty for it.

Monarch uses simplified penalty assumptions for forecasting purposes. Actual tax rules and exceptions can vary by account type and personal situation, so consider consulting a tax professional before making withdrawal decisions.

Splitting extra savings

When your projected income exceeds your expenses, the surplus is automatically allocated to "Extra Savings" — a projected account that grows at 3% annually by default (adjustable). You can also split this surplus across your existing real accounts — using either a percentage or an absolute amount. This lets you project how those accounts will grow with the added contributions.

Splitting extra savings is off by default. To set it up, click the Settings icon next to Extra Savings, then click Change savings splits. From there, assign a percentage or dollar amount to each account in priority order. You can also get to this from the global plan assumptions panel, or from an individual account's settings via the Edit button next to its yearly direct contribution.

When you set up splits, percentages work on a cascading basis — each percentage applies to what remains after the previous allocation, not to the original total. For example, if you have $100K in surplus and assign 50% to Account A and then 50% to Account B, Account A gets $50K and Account B gets $25K (50% of the remaining $50K). You can also assign absolute dollar amounts. Any surplus not explicitly allocated continues to flow into Extra Savings.

Please Note: When you set an absolute dollar amount for a savings split, that amount grows with inflation over time, so the real contribution stays consistent in today's dollars. Percentage-based splits are not affected by inflation.

Tax settings

Forecasting applies tax assumptions when withdrawing from certain account types. These are used to estimate the after-tax value of withdrawals during periods when your expenses exceed your income (such as retirement). The defaults are based on common US tax scenarios and are adjustable.

These defaults reflect typical US tax rates for people in or near retirement. The 15% capital gains rate applies to most long-term gains for middle-income earners. The 80% taxable gain assumption accounts for the fact that a portion of a brokerage withdrawal is typically return of principal (not taxable). The 20% income tax rate on tax-deferred withdrawals reflects a common effective rate in retirement. You can adjust any of these to reflect your actual tax situation.

Yearly paycheck contributions

For payroll-eligible tax-deferred and tax-free accounts — including 401(k), 403(b), 457(b), Roth 401(k), TSP, HSA, SEP IRA, SIMPLE IRA, and RRSP — you can tell Forecasting how much you contribute each year from payroll deductions. Traditional and Roth IRAs are not eligible, since they aren't funded by payroll deduction. These contributions happen before income hits your paycheck, so they won't appear in your take-home income baseline or in your extra savings splits. They need to be set up manually in Forecasting. If your 401(k), 403(b), or 457(b) contains both pre-tax and Roth contributions, see Mixed 401(k), 403(b), and 457(b) accounts below for how to model both portions correctly.

To add a contribution, open the account in the Accounts tab and click the settings icon. Enter your yearly paycheck contribution amount, including any employer match. Once set, the account's year-by-year breakdown in the Forecasting table will show paycheck contributions as a separate line item alongside starting balance, growth, and withdrawals. Contributions automatically pause during any career break assigned to the account owner, and stop entirely when the account owner retires.

Make sure your income sources reflect only your take-home income — do not include pre-tax contributions in your income baseline, as this will cause double-counting in your forecast.

Please Note:

• If an investment account like a 401k doesn't seem to be growing as expected, this is the most likely reason — the yearly paycheck contribution field is blank by default. See the FAQ below for more detail.
• Paycheck contributions grow automatically at your plan’s inflation rate (which defaults to 3%). This growth rate is not currently adjustable per account.
• In the current calendar year, Forecasting estimates your account's Jan 1 starting balance by working backward from today's balance using your planned contributions and growth rate — not your actual transaction history. If you contribute on an irregular schedule (for example, a lump sum at the start of the year rather than monthly), the estimated starting balance may not perfectly reflect reality. The end-of-year projected balance is still correct.
• In the current calendar year, direct contributions from savings splits are included when Forecasting estimates each account's Jan 1 starting balance. If your actual contribution pattern differs from monthly (for example, quarterly or annually), the year-one starting balance may be slightly off — but the end-of-year balance remains accurate.

Mixed 401(k), 403(b), and 457(b) accounts

Some 401(k), 403(b), and 457(b) accounts hold both traditional, pre-tax contributions and Roth contributions in the same account. If yours does, you can tell Forecasting so it models each portion with the right tax treatment.

To enable this, open the account's settings in the Accounts tab and turn on Account contains Roth contributions. This option is available for 401(k), 403(b), and 457(b) accounts only.

Once enabled, Forecasting splits your balance and yearly contributions evenly between traditional and Roth. Adjust these amounts to match your account. Your total yearly paycheck contribution updates automatically when you change either contribution amount.

Once the account is set up as a mixed account, it appears twice in the Accounts tab — once under Tax-deferred Investments for the pre-tax portion, and once under Tax-free Investments for the Roth portion — so you can see each portion grow and be drawn down independently.

In the withdrawal order, the two portions also appear as separate rows, so you can control when each is used. By default, the pre-tax portion is treated like a tax-deferred account, and the Roth portion is treated like a tax-free account.

Please Note: As your account balance changes over time, you may need to update the traditional and Roth balance split manually to keep the projection accurate.

Liabilities

Interest rates and payments

Liability accounts (loans, credit cards) are seeded from your Debt Paydown tab. If you update interest rates or payment amounts there, Forecasting will reflect those changes automatically — unless you've manually overridden them inside Forecasting.

Please Note: When entering payment amounts for loans, include only principal and interest — do not include taxes or insurance.

Frequently Asked Questions

• Why does my income (or my paycheck contributions) grow over time in my forecast?
• Why doesn’t my 401k (or other investment account) seem to be growing as expected?
• Why does my account have the wrong tax treatment?
• Why are my loan balances going up (or not changing at all)?
• Can I stop Forecasting from withdrawing from a specific account?
• Why is Forecasting showing a withdrawal penalty?
• Why am I seeing an account owner or birthday warning in Forecasting?

Why does my income (or my paycheck contributions) grow over time in my forecast?

By default, your income sources and yearly paycheck contributions grow with your forecast’s inflation rate (3% per year by default), on the assumption that your earnings will roughly keep pace with the cost of living.

How this looks depends on how you’re viewing your forecast:

• Today’s dollars (the default for new forecasts): Amounts that match inflation will look roughly flat, because they’re shown in today’s purchasing power.
• Future dollars: These amounts rise each year, because they’re shown as the actual dollar figures you’d see at that time.

You can switch views anytime under Edit assumptions > Show future values in.

If your income won’t keep up with inflation, open that income source and set its Change over time to Doesn’t change or a custom rate. Paycheck contributions always grow at your plan’s inflation rate and can’t be adjusted per account yet. If you’re near the IRS contribution limit, keep in mind that your projected balance for that account may be overstated. Setting the inflation rate to 0% would also hold contributions flat, but it affects other inflation-adjusted inputs in your forecast, so think through the tradeoffs first.

Why doesn’t my 401k (or other investment account) seem to be growing as expected?

If an account like a 401k appears to be growing more slowly than you’d expect, it’s most likely because the yearly paycheck contribution hasn’t been set up yet. By default, Forecasting projects account growth based only on the starting balance and growth rate — it won’t automatically factor in ongoing contributions.

To fix this, open the account in the Accounts tab, click the settings icon next to the account name, and enter your yearly paycheck contribution amount (including any employer match). Once set, the account’s projected balance will reflect those contributions going forward.

Why does my account have the wrong tax treatment?

Forecasting determines an account's tax classification based on the account subtype set in Monarch — not the account name. If an account is showing the wrong tax treatment, the most likely fix is updating the subtype.

To check or update the subtype, go to Accounts, find the account, click the edit icon, and confirm the subtype matches the real account type (for example, make sure a Roth IRA is set to "Roth IRA" and not a generic "IRA"). Save the update and return to Forecasting — the classification should update automatically.

Here's how account subtypes map to Forecasting tax classifications:

If the subtype looks correct but Forecasting is still showing the wrong classification, please reach out to support.

Why are my loan balances going up (or not changing at all)?

There are two common issues with loan balances in Forecasting:

If the loan balance is increasing over time: The loan likely has an interest rate set, but the payment amount is missing or too low to cover the monthly interest.

If the loan balance isn't changing at all: The loan is missing its interest rate and/or payment fields entirely, so Forecasting can't project it.

To fix either issue, confirm the interest rate and monthly payment are filled in with values greater than zero. If those values look wrong or empty, you can also check Goals > Pay Down — Forecasting pulls from Pay down automatically, but any edits made directly in the Forecasting sidebar are independent and won't sync back to Pay down.

Can I stop Forecasting from withdrawing from a specific account?

Yes. Open the account's settings in Forecasting and set Withdrawal timing to Never. The account can still be included in your projected net worth, but Forecasting won't use it to cover projected expenses.

Why is Forecasting showing a withdrawal penalty?

Forecasting may show a withdrawal penalty when it needs to draw from a penalty-eligible account before the account owner reaches the account's penalty-free age.

Most penalty-eligible retirement accounts default to a 10% penalty and a penalty-free age of 59.5. HSAs default to a 20% penalty and a penalty-free age of 65. You can review or adjust the account's withdrawal timing, early withdrawal penalty rate, and penalty-free age from the account's settings in Forecasting.

Why am I seeing an account owner or birthday warning in Forecasting?

Forecasting needs the account owner's age to know whether early withdrawal penalties should apply. If a penalty-eligible account is missing an owner, or the owner is missing a birthday, Forecasting may ask you to update those details. Until the missing information is fixed, that account won't be included in forecast calculations.

There are two exceptions: if there is only one member in the Monarch household, Forecasting can infer the account owner automatically, though that owner still needs a birthday; and if the account's Withdrawal timing is set to Never, the account will still be included in projection math because Forecasting won't need to calculate a withdrawal penalty for it.

Related articles

• Forecasting in Monarch
• Life Events in Forecasting
• Using Forecasting Scenarios
• Understanding Chance of Success (Monte Carlo)
• Forecasting setup checklist

These forecasts show hypothetical outcomes based on your account information and the assumptions in the model, including any changes you have made. Projections do not guarantee future performance. Even small shifts in assumptions can lead to very different results over time. If you are viewing a projected retirement balance or goal outcome, it is based on assumptions such as rate of return, inflation, tax rates, and life expectancy. We show you those assumptions, and you can adjust them. If you change the inputs, the outcome will change too. This tool is for informational and educational purposes only. It is not investment, tax, legal, or financial advice, and it should not be the only basis for a major financial decision.