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CoastMath projects your plan one calendar year at a time, from your plan’s start date to the last year the plan covers. Every year runs through the same eight stages in the same order, and each stage starts from the balances the one before it left.
The order explains most results that look surprising at first: why a required distribution arrives before a shortfall is funded, why a withdrawal can raise that year’s tax, and why a raise shows up in January.
| Stage | What happens | Details |
|---|---|---|
| Events | Milestones reached this year take effect, and so do household changes such as a partner’s death. | Milestones and event timing |
| Growth | Opening balances earn the year’s returns, and brokerage dividends are taxed and reinvested. Checking and savings don’t earn interest. Property appreciates. | How balances grow each year |
| Required | Required minimum distributions, qualified charitable distributions and any 72(t) series come out of their accounts. | Required minimum distributions |
| Income | Pay, Social Security, pensions and other income arrive for the months they’re active. Payroll deductions, workplace contributions and withholding come out. | Wages, raises and work income |
| Spending | Expenses (after any flexible spending cuts), health coverage, gifts, loan payments and property costs are due. Scheduled property sales close. | Recurring and one-time expenses |
| Cash flow | Roth conversions and transfers run. Money left over follows your allocation rules; a shortfall is withdrawn in your withdrawal order. | How shortfalls are funded |
| Taxes | Tax is figured on the year’s final income, including the withdrawals that paid it, then reconciled with what was withheld. | How CoastMath calculates income tax |
| Year end | Balances, net worth and taxes are recorded. Amounts that track inflation, raises and benefit adjustments step up for next year. | Today’s dollars and future dollars |
A stage only sees what earlier stages produced. Required distributions are taken before income and spending are counted, so an RMD reduces the shortfall that later withdrawals have to cover. Allocation rules only receive money that’s left after spending; moving money from one account to another takes a transfer or Roth conversion rule.
A single filer turns 75 in 2027. The plan started in 2026 with $20,000 in checking, a $300,000 brokerage account holding $200,000 of basis, and a $600,000 traditional IRA. Social Security pays $30,000 a year, and spending is $70,000 a year in 2026 dollars. The plan assumes 6% stock growth and 3% inflation, and withdraws from checking, then brokerage, then the IRA.
Social Security and spending are 3% higher than in 2026 because both follow the plan’s inflation.
Show data
| Step | Amount |
|---|---|
| Social Security | $30,900 |
| RMD | $24,871 |
| Federal tax | −$1,578 |
| Spending | −$72,100 |
| Shortfall | −$17,907 |
| Withdrawals | $17,907 |
| Social SecurityIncome stage; this year’s benefit after a 3% adjustment | $30,900 | |
|---|---|---|
| + | Required minimum distributionRequired stage; December 31, 2026 IRA balance ÷ 24.6 | $24,871 |
| − | Federal income taxTaxes stage; figured after the withdrawals below | $1,578 |
| − | SpendingSpending stage; $70,000 in 2026 dollars | $72,100 |
| = | Shortfall | −$17,907 |
| → | Withdrawn from checkingCash flow stage; checking is first in the order | $2,756 |
| → | Withdrawn from brokerageRealizes about $6,150 of long-term gain | $15,150 |
Figures are rounded to the dollar. There is no state tax in this example.
The withdrawal realizes a gain that is taxed at 0% at this income. It still raises the year’s tax: the gain counts toward the income that decides how much Social Security is taxable, so about $5,230 more of the benefit is taxed. Without the sale, the year’s federal tax would be about $1,005 instead of $1,578. That’s why the tax is settled after the withdrawals, not before.
Amounts you enter are annual, and CoastMath counts them for the months they’re active. An income that ends at a milestone reached in May counts for January through April. A milestone set by age takes effect in your birth month.
- Opening balances earn the full year’s return.
- Money that moves during the year (contributions, withdrawals and required distributions) is treated as moving in equal monthly amounts, so it earns about half a year’s return. That’s why an account that pays out an RMD ends the year slightly lower than its opening balance plus a full year of growth minus the RMD.
- Inflation, raises and benefit adjustments take effect each January. An amount entered in today’s dollars is converted to each year’s dollars with the plan’s inflation.
- The first year covers only the months from your start date to December 31. See Your plan’s start date and first year.
A withdrawal from a pre-tax account is taxable income, and a brokerage sale can realize a gain. Either can raise the year’s tax, and the extra tax needs cash of its own. CoastMath figures the year’s tax on its final income, then withdraws whatever the additional tax requires, so the withdrawals and the tax they create agree when the year closes.
Withholding is compared with the final tax. A balance due is paid from that year’s cash, using the withdrawal order if needed. A refund is available that year and follows your allocation rules like other money left over. See Withholding, refunds and balances due.
If the withdrawal order runs out before a shortfall is covered, CoastMath sells property you’ve marked for automatic sale, other property before a primary residence. Anything still unpaid is recorded as an unfunded expense, and the first year that happens is the plan’s failure year. Each later year, CoastMath tries to pay it by withdrawing from your accounts in the withdrawal order; the failure year stays on record even if it’s repaid. See When a plan runs short.
At year end CoastMath records every account balance, property values, loan balances, taxes by type and the year’s money flows. Net worth is accounts plus property, minus loan balances and any unfunded expenses. The year also records its inflation factor, which is how results convert to today’s dollars. See Read the overview and net worth and Trace a year of money in and out.