Retirement Planning Spreadsheet vs Software

What a spreadsheet is genuinely better at

Let us start where the spreadsheet wins, because it does.

• Total transparency. Every number traces to a formula you can click into. No projection tool, ours included, is as inspectable as a sheet you wrote.
• Total flexibility. A rental property with a weird depreciation schedule, an inheritance with conditions, a business sale in year seven — you can model anything you are willing to build.
• No account, no subscription, no vendor. The file is yours, forever, in a format that will still open in twenty years.
• You learn the mechanics. Building the model teaches you more about your own finances than using anyone's software will.

If your situation is a straightforward "save this much, retire at 67, spend that much", a spreadsheet is a perfectly respectable answer and you should not let anyone sell you out of it.

What you actually have to build

The trouble starts when the question stops being "how big will the balance be" and starts being "how much of it can I spend after tax". Here is the machinery that sits between those two questions.

The failure mode nobody warns you about

It is not a broken formula. It is the single "expected return" cell.

A spreadsheet that grows the portfolio by 6% every year produces a smooth, reassuring curve — and quietly assumes away the risk that actually ends retirements. Two retirees with identical average returns can end up in completely different places depending on whether the bad years came first or last, because withdrawals during a downturn sell more shares to raise the same dollars. That is sequence of returns risk, and averaging makes it invisible.

Modelling it properly means either a Monte Carlo simulation across thousands of randomised paths or a replay of real historical sequences. Both are buildable in a spreadsheet. Neither is a weekend.

When a spreadsheet is still the right answer

• Your plan is straightforward and you mainly want to see the balance grow.
• You have an unusual asset or arrangement no general-purpose tool models, and it dominates the plan.
• You want to learn the mechanics, in which case building it yourself is the best possible exercise.
• You already have a model you trust and maintain, and it answers the questions you actually ask.

When to stop maintaining it

• You are trying to decide on Roth conversions, and the answer depends on brackets, IRMAA and future RMDs interacting.
• You are retiring before Medicare and need to model premiums and the subsidy cliff.
• You want a probability rather than a point estimate.
• You have caught yourself not updating the bracket tab for two years — this is the most common one, and the most dangerous, because the model still looks right.

What Planomy gives you instead

• Year-by-year projections with separate ledgers for cash, taxable, traditional, Roth and HSA balances, over a horizon of up to 100 years.
• Federal tax from a dated, versioned dataset — 2026 ordinary and long-term capital-gains brackets, FICA and Medicare — rather than hard-coded numbers.
• State tax for all 50 states and DC: 29 with full progressive brackets, the rest at a flat effective rate, labelled as such.
• RMDs on the IRS Uniform Lifetime Table with SECURE 2.0 start ages.
• A Social Security claiming explorer across the full 62-to-70 range, with a benefit estimate built from your earnings history.
• Medicare Part B and Part D premiums with IRMAA surcharges keyed off the two-year MAGI lookback.
• Monte Carlo across 1,000 to 10,000 trials, plus a historical backtest over every rolling window of real US returns and CPI-U inflation from 1928 to 2024.
• Four named drawdown strategies side by side, FIFO / LIFO / HIFO / lowest-tax-first lot selection on taxable sales, and Roth conversions by amount or fill-to-bracket.
• Scenarios, life events and goals, plus plan-versus-actual cash-flow tracking with optional bank sync.

Free, with no account, and your plan stays on your device — see how the no-sign-up model works. You can download a full copy of the plan at any time, which is the spreadsheet property people are most reluctant to give up.

Who Planomy is not for

Software is not automatically the upgrade. Keep the spreadsheet, or pick a different product, if any of these describe you.

• You want balances and prices to update themselves. Planomy has no live market-price or holdings feed. Balances are what you enter, or what an optional bank connection imports. That is a deliberate local-first trade-off, and if you want a portfolio that refreshes on its own it is the wrong tool.
• You want a person to look at your plan. Planomy does not sell advice and has no advisors attached to it. If what you actually want is a fee-only CFP to review your situation, hire one — a projection is an input to that conversation, not a replacement for it.
• You are planning outside the US. The tax engine models US federal brackets, Social Security, Medicare and IRMAA, and RMDs. None of that transfers.
• You need exact state tax in every state. 29 states plus DC carry full progressive brackets; the rest are modelled at a flat effective rate. The app tells you which kind your state is using rather than hiding it, but if you live in a flat-rate-approximated state and the state bill is the crux of your decision, treat that line as an estimate.
• Day-to-day budgeting is the whole job. Planomy compares your actual spending against your plan, but it is a long-horizon planner first. If you want envelope budgeting, receipt splitting and bill reminders, a dedicated budgeting app will serve you better.

The pragmatic answer: use both

Nothing forces a choice. Keep the spreadsheet for the parts you like owning — a property model, a business sale, a bespoke income stream — and let software carry the tax code, the RMD tables and the simulations. Feed the spreadsheet's outputs in as inputs. That is how a lot of careful planners actually work, and it beats either purist position.

If you want to see the difference immediately, take the retirement year your spreadsheet currently says is safe and run it through the planner with the same balances. If the answer moves, the gap is almost always tax or sequence risk — the two things a hand-built model is most likely to be missing.

Frequently asked questions

Is a retirement planning spreadsheet good enough?

For a straightforward plan, often yes — a spreadsheet is transparent, flexible and free. It stops being enough when the answer depends on progressive tax brackets, the taxation of Social Security, RMDs, Medicare IRMAA surcharges and sequence-of-returns risk interacting with each other, because all of those have to be built and then maintained by hand.

What is the biggest mistake in DIY retirement spreadsheets?

Using one flat average return for every year. It produces a smooth curve that hides sequence-of-returns risk — the fact that a bad decade at the start of retirement does far more damage than the same decade at the end, because withdrawals during a downturn sell more shares. Modelling it needs Monte Carlo or historical sequences, not an average.

Can a spreadsheet handle Roth conversion planning?

Only with a lot of work. A useful conversion model needs the full bracket table, the provisional-income formula that decides how much of your Social Security is taxable, projected RMDs, and IRMAA's two-year lookback — because a conversion today can raise a Medicare premium two years later. Each is buildable; getting them to interact correctly and stay current is the hard part.

Do I have to give up my spreadsheet to use planning software?

No, and many careful planners keep both. Use the spreadsheet for anything bespoke that no general tool models — a property, a business sale, an unusual income stream — and let software carry the tax code, the IRS tables and the simulations. Feed one's outputs in as the other's inputs.

Is there free retirement planning software, or do I have to pay?

There is free software. Planomy's full planner is free with no account and stores your plan on your device; several brokerages offer free planners tied to accounts you hold with them; and some subscription products have free tiers. Check how each is funded, because that shapes what the free version is designed to do.

Related reading

• Sequence of returns risk — the thing an average return hides.
• What is a safe withdrawal rate? — the number most spreadsheets hard-code.
• Best retirement planning software — the rest of the category.
• Compound Growth Calculator — the part a spreadsheet does well, without the spreadsheet.
• Planomy pricing — what is free, what a free account adds, and what Plus costs.
• All free calculators — 35+ single-question tools, no account.
• All guides — the strategy behind the numbers.