How the simulation calculates: assumptions, sources, limits
Anyone who entrusts their financial planning to a calculation model should know how it calculates. A look under Wealth4Life's hood: where the numbers come from, which assumptions you control yourself – and what the model cannot know.
A simulation is only as trustworthy as its calculation rules – and those should not be a trade secret. So here it is, as plainly as possible: how Wealth4Life calculates.
The basic principle: year by year, everything together
The model represents the household as a whole and calculates it year by year, from today to the end of life. The same thing happens every year: income flows in, contributions to AHV (state pension) and the pension fund are paid, expenses and mortgage interest are paid, taxes are assessed for the canton of residence, and the remainder is added to or drawn from wealth. The result of one year is the starting point for the next. Events – retirement, lump-sum withdrawal, sale of the home, death – take effect in the year in which they occur, and act on everything that follows.
That sounds self-evident, but it is the core of the matter: because everything sits in the same model, a change in one place – a pension fund buy-in, for example – can show its side effects everywhere else: in the tax calculation, in the wealth trajectory, in the pension.
Where the numbers come from
The calculation parameters come from public, official sources: tax rates and deductions follow the data of the Federal Tax Administration (ESTV) for the Confederation and the cantons, the AHV figures follow the scales and fact sheets of the social insurance authorities, the occupational-pension (BVG) parameters follow the statutory requirements. This reference data is stored in the system and updated whenever the official values change. There are no invented or estimated "market figures" here.
Which assumptions you control yourself
No model knows the future. Returns, inflation and interest rates are assumptions – and they are yours: they are visible in the scenario and can be changed. Anyone who wants to know how robust a plan is should calculate it with both cautious and optimistic assumptions – comparing the trajectories says more than any single forecast. The same applies to life planning itself: retirement age, housing situation and employment levels are inputs, not predictions.
What the model does not know
Honesty is part of transparency. The model simplifies where reality is individual: it represents pension fund regulations in their essential mechanisms, not in every special rule. It does not know case-by-case tax practice, future changes in the law, or the returns of the next decade. Every result is a model calculation under the assumptions made – not a guarantee and not advice. Where the product still has gaps, that is stated openly, rather than hidden behind a polished surface.
Why that is enough
The value of a simulation does not lie in predicting the future – nobody can do that. It lies in making connections and orders of magnitude visible: which decision has how much effect, where a plan is sensitive and where it is robust. That does not require prophecy, but clean mechanics, official reference values, and assumptions you can see and change. That is exactly the aim.