Cash buffer, drawdown and tax

The cash buffer report shows how your spending reserves behave across all percentile paths. It is the most practical chart for understanding day-to-day retirement sustainability — separate from whether the portfolio survives overall.

Reading the cash buffer chart

What the buffer shows

The cash buffer is the spending reserve — the liquid cash from which monthly expenses are paid. The chart shows the buffer balance over time for P10, P50 and P90 paths.

P50 buffer — the typical path

If the P50 buffer stays healthy throughout the horizon, your median plan is sustainable. A rising P50 buffer suggests the portfolio is generating more than you are spending.

P10 buffer — the critical line

The P10 buffer path is the one to watch. If it falls to zero and stays there, the worst 10% of paths are running out of spending capacity. This is the practical measure of whether your plan handles bad markets.

A buffer that depletes to zero and then recovers (because guaranteed income eventually covers expenses) is very different from one that depletes and stays at zero. Look at the shape, not just whether it hits zero.

Buffer min and max lines

If you are using cash buffer band strategy, the green dashed lines show your configured minimum and maximum. The engine triggers a portfolio withdrawal when the buffer falls below the min.

Reading the drawdown waterfall

Which vehicle is drawn first

The drawdown tab (if visible) shows withdrawals by vehicle over time. The sequencing follows your configured order — ISA-first means the ISA depletes before the GIA and pension are touched.

If the ISA depletes early in retirement, the subsequent GIA and pension withdrawals are more heavily taxed. This is why ISA-first is generally preferred — you exhaust tax-free assets first.

Watch for vehicle exhaustion

If a vehicle reaches zero early in the simulation, all subsequent withdrawals must come from the remaining vehicles — potentially at higher tax rates. This shows up as a step-change in the tax breakdown.

Reading the tax breakdown

Lifetime tax at P50

The tax breakdown shows the cumulative income tax, CGT and interest tax over the full retirement horizon at the P50 path. This is the single-path estimate, not a cross-sectional average.

Tax is computed on the median trajectory. On lower-percentile paths, actual tax would be lower because withdrawals are smaller. The P50 tax figure is therefore a reasonable upper estimate for planning purposes.

CGT spikes

Large CGT figures in specific years often correspond to GIA withdrawals in years when the running cost basis is low (meaning a large proportion of the withdrawal is treated as a gain). Bed & ISA transfers also appear here.

Track 3 · R2 of 3