Reading the Readiness Score

The five components

The score is an adaptive-denominator weighted average of five components:

Funded Ratio (30 points, always included). Your portfolio at retirement divided by the spending it needs to cover over your retirement horizon. Calculated as: portfolio at retirement ÷ (annual expenses × years in retirement). A 1.0 funded ratio means the portfolio exactly covers expected spending at zero return. Higher is better; typically a well-funded plan is 1.3+.

Withdrawal Rate Safety (25 points, always included). Your first-year withdrawal rate as a fraction of portfolio. Scored linearly between a 3.5% floor (full 25 points) and a 7% ceiling (zero points). Lower withdrawal rate = safer.

Risk Resilience (15 points, always included). How well the plan holds up across Monte Carlo scenarios. Uses the simulation's failure rate when available; estimated from Funded Ratio and Withdrawal Rate otherwise.

Income Replacement (20 points, conditional). Ratio of retirement income (Social Security, pension, portfolio withdrawals) to pre-retirement income. Included only if the user has modeled retirement income sources. Scored on a 0–80% target (where 80% is considered full replacement).

Income Gap Coverage (10 points, conditional). How well the plan covers the gap between retirement and major guaranteed income starting (e.g., Social Security at 70 for someone retiring at 62). Included only if the user has specified both retirement date and guaranteed income timing.

Adaptive denominator

The score is not always scored against 100 total points. Instead, the denominator adapts to what's applicable:

• If all five components apply, the score is divided by 100.
• If only the three always-included components apply (no modeled retirement income), the score is divided by 70.
• If four apply (missing either income replacement or gap coverage), divided by 80 or 90.

This prevents portfolio-funded retirees without modeled Social Security/pension from being artificially capped — the score reflects their actual plan quality, not a penalty for not modeling income they may or may not receive.

What a score means

• 90+: excellent. Plan is robust across scenarios. Some over-funding possible.
• 80–89: strong. Plan works in most scenarios. Small adjustments could strengthen.
• 70–79: good. Plan works but has moderate sensitivity to bad outcomes.
• 60–69: fair. Plan is fragile. Meaningful risk of shortfall.
• 50–59: weak. Plan has material problems. Consider changes.
• <50: poor. Plan likely won't meet goals as-is.

These are rough guides; a 78 isn't meaningfully different from an 82. Use the score as a directional signal, not a rigid target.

Component diagnostics

If your overall score is low, look at individual components to see where:

Low Funded Ratio. Portfolio isn't big enough relative to spending needs. Levers: save more, retire later, spend less.

High Withdrawal Rate. Drawing too fast. Levers: reduce spending, delay retirement, increase guaranteed income.

Low Risk Resilience. Plan survives the average case but fails in bad scenarios. Levers: more conservative allocation, larger safety margin, flexible spending.

Low Income Replacement. Retirement income is much less than working income. May indicate inadequate guaranteed income sources.

Low Income Gap Coverage. Portfolio has to cover a long pre-income gap. Levers: delay retirement, start guaranteed income earlier.

What it doesn't capture

The readiness score is a summary; it necessarily loses information. Things it doesn't explicitly capture:

Flexibility. Plans with high flexibility (ability to cut spending, part-time work, downsizing options) are more robust than rigid plans with the same score.

Tail risk specifics. A plan with 95% success and 5% catastrophic failure has a different risk profile than 90% success with mild shortfall in failed trials. The score doesn't distinguish.

Specific expense categories. Healthcare or long-term care can produce large outlier events not captured in average-expense modeling.

Estate goals. Someone who wants to maximize legacy to heirs has different needs than someone who wants to "die with zero." The score treats both the same.

Sequence-of-returns bad luck. A specific bad-luck retirement start can damage a high-score plan; the score reports probability, not certainty.

Using the score

Track over time. As your situation changes (savings, market returns, life events), the score should update. Trends matter more than any single reading.

Compare alternatives. Different scenarios (retire at 62 vs 65, Roth conversion strategy, different allocation) produce different scores. Use the score as a comparison tool.

Don't over-engineer to max it. Chasing 98 vs 92 often means over-saving and under-living. Target a comfortable level, not a ceiling.

Use alongside other views. Percentile bands, individual trial traces, and detailed cash-flow views complement the score. The score is a summary; the details are still worth examining.

Score improvement over time

Common patterns:

• Scores typically improve as you approach retirement with regular saving.
• A market crash can reduce a score by 5–15 points; it often recovers as markets recover.
• A change in target spending (down) can add 10+ points quickly.
• Delaying retirement by 2 years can add 10–20 points.
• Optimizing Social Security claim age typically adds 5–10 points.

How Horizons uses this

The Readiness score appears prominently on your Retirement page. The contributing components are visible on hover or expansion, showing which dimensions are strong and which are weak. Scenario comparisons show how the score changes across different plan variations.