All the Numbers

Which assumption matters most

From the All the Numbers wiki · The plan itself

Every plan rests on assumptions that are guesses: returns, inflation, house prices, mortgage rates, spending and pay. The sensitivity chart shows which of them the result depends on most, so attention goes where it changes the answer. Its companions are stress tests, which test particular bad events, and Monte Carlo.

The rules

Each assumption is moved down by a fixed step and then up by the same step, with everything else unchanged:[1]

Assumption Step each way
Investment returns 1 percentage point
Inflation 1 percentage point
Home prices 1 percentage point
Mortgage rates 1 percentage point
Living costs 10%
Pay 10%

Rows appear only when they apply: no home, no home price or mortgage row; no pay, no pay row. The rows are ranked by the swing, which is net worth at the end of the plan with the assumption moved up less net worth with it moved down, in today's dollars. A run that stops before the end because money runs out is ranked first.

What the chart measures

The steps are not equal in size or in kind, so the chart compares these particular changes, not the importance of each assumption in general.

Inflation is different from the others. A change to inflation moves the rate for tax brackets, living costs, pay, rent, carrying costs and recurring events together. It leaves investment returns, home price growth and mortgage rates at their nominal rates. Higher inflation therefore means costs rise faster while every asset earns less after inflation, and the end amount is also divided by a larger factor to restate it in today's dollars. That combination is why it is often the largest bar. The default inflation is 2.5%[2] and the default return 6.35%;[3] see inflation and today's dollars.

What the engine does

  • Reruns the whole plan twice for each assumption, through the same calculation as the main projection, so tax, withdrawals and borrowing respond to each change.
  • Divides each run's final net worth by (1 + that run's inflation) for each year of the plan.
  • Lists first any assumption whose change stops the plan.
  • Starts from the plan's own values, so the chart changes with them. The default return and inflation are described in expected returns.

What it deliberately does not

  • It does not move two assumptions together, apart from inflation's built-in effects.
  • It does not say how likely each change is. For that, see Monte Carlo, which varies returns and home prices by their historical spread.
  • It does not include assumptions outside the six, such as tax rates or retirement age.

See also

  • Expected returns and fees · The default return is 6.35% a year, nominal and net of fees, for an 80/20 stock and bond portfolio. It is an expected long-run average, not a forecast, and an account's own rate replaces it.
  • Home prices over time · A home's value is projected by growing it at one assumed rate, 3.5% a year by default, which is PWL Capital's 1% real return on a house plus 2.5% inflation. It is an editable assumption, not a forecast, and the Simulation view shows how widely a real home's value varies around it. A home added to a plan starts at $600,000 with 20% down until you enter its own figures.
  • How a mortgage payment is worked out · A fixed-rate Canadian mortgage compounds its interest twice a year, not monthly, so the monthly payment comes from a rate slightly lower than the quoted rate divided by twelve. The default rate is 4.27%, and the rate stays fixed for the whole amortization.
  • Inflation and today's dollars · The default inflation rate is 2.5% a year. A future dollar amount can be shown as is, or divided by (1 + inflation) for each year to show what it would buy today.
  • Monte Carlo: many market histories · The Simulation page runs the plan 500 times with investment returns and home prices drawn at random each year, then shows the spread of net worth and how many runs finish, borrow or run out of money.
  • Our conventions · Where the law or the published guidance does not say how to treat something, the plan has to choose. Each of those choices is listed with its reasons, and each is marked "Our convention" wherever a figure depends on it.
  • Stress tests · A stress test reruns the whole plan with one thing made worse, such as a higher mortgage rate at renewal or a year of lost income, and reports how far final net worth moves and whether the plan still pays its bills. It carries no probabilities.

References

  1. ↑FP Canada / IQPF Projection Assumption Guidelines (sensitivity on return and inflation); our convention · The sensitivity chart moves one assumption at a time — investment returns, inflation, home prices and mortgage rates by 1 point each way, living costs and pay by 10% each way — reruns the whole plan both ways and ranks the assumptions by how far the end of the plan moves, in today's dollars. Inflation moves every rate the plan grows by (costs, brackets, pay, rent) and, with real returns held (nominal = real + inflation, so (1 + r) / (1 + inflation) is unchanged), the nominal return of every invested account and home prices; savings interest and mortgage rates stay, being nominal contracts. A separate row, Inflation with returns unchanged, moves the same rates but holds every return fixed, so higher inflation there means lower real returns. · effective 2026-10-01
  2. ↑PWL Capital — Financial Planning Assumptions (Market Capitalization Weighted Portfolio), mid-year 2026 data update, Table 1 (Expected Inflation Composition) · Assumed long-run CPI inflation: half Canadian historical inflation since 1900, half the Bank of Canada target (PWL Capital, Financial Planning Assumptions, Table 1) · 2.5% · effective 2026-08-17
  3. ↑PWL Capital — Financial Planning Assumptions (Market Capitalization Weighted Portfolio), mid-year 2026 data update, Table 8 (Portfolio Expected Returns) · Default expected return on an investment account a year, nominal and net of fees, for an 80/20 equity/bond market-cap portfolio (PWL Capital, Financial Planning Assumptions, Table 8) · 6.35% · effective 2026-08-17