Every month this plan works out what comes in, subtracts tax, then subtracts what goes out — living costs, rent, whatever a home costs to hold. What survives is yours to do something with, and until you say what, it sits in cash. When a month needs more than the plan has, cash is drawn first; see borrowing when short.
Cash is an account like any other in the projection. It has a balance you can see, it earns interest, and money is drawn from it before anything is sold.
Why it does not go into an investment account
Until 12 September 2026 it did. The engine swept everything left over into whichever account happened to be listed first, with no regard for contribution limits. A TFSA with $7,000 of room could take $63,000 in a single year, silently, and the projection would compound the result as though the CRA had allowed it.
That is a serious error in a tool like this. Over-contributing a TFSA is taxed at 1% a month on the excess (see over-contributions), and a plan that quietly assumes the excess was permitted overstates what you will have — flatteringly, and by more the longer the projection runs.
It also made the contribution field on the first account do nothing. The dollars it claimed to add were already arriving by the sweep, so typing a number into it changed the label on the money and not the amount.
Now nothing enters a registered account unless you asked for it, and what you ask for is trimmed to the room you actually have.[1] The leftover can instead be placed for you by auto-allocation.
The emergency fund
When the plan places your savings for you, you can set an emergency fund: how much cash you keep on hand in ordinary bank accounts, in today's dollars. Leftover cash fills it before anything is invested. While you work, a month that runs short draws on it first, and the next months with money left over refill it.
The reserve is not taken out of the balances you enter for your accounts: those stay where they are. The plan's cash starts at the cash you have in the bank (nothing, if you leave that blank), which earns the interest on cash and counts toward the fund first. The rest of the fund is built from the money left over each month, the way a regular transfer from pay builds an emergency fund. Until it is full, nothing is invested from the leftover.[2]
Once everyone in the plan with a salary has retired, nothing refills it, so the plan keeps it.[3] From that month, a short month draws any cash above the reserve, then your accounts in the withdrawal order, and the reserve only after them, before borrowing. If someone keeps working to the end of the plan, the reserve is drawn first as before.
What cash earns
The default is the Bank of Canada posted rate on non-chequable savings deposits — 0.01% at the last reading.[4] That is what money genuinely earns sitting in an ordinary big-bank savings account, which is where most uninvested money actually is.
It is deliberately the pessimistic end of the range. A high-interest savings account paid about 2.80–2.85% on the same date. If your savings account pays more than the posted rate, change the rate — it is an input, not a rule. Invested money earns the expected return instead.
When the plan mentions it
If more than a year of living costs builds up in cash, the plan says so once. That is not a judgement about holding a buffer, which is sensible. It is a flag that a large amount of money is sitting at a rate near zero because nobody has said where it should go, and that the fix is one field away.
What this changes about your projection
Net worth will be lower than it was before this change, sometimes a lot lower, and that lower number is the honest one. The gap between it and what you would have if the money were invested is the thing worth looking at: it is what your accounts are actually worth to you, made visible instead of assumed.