No black box. Here's what actually goes into your numbers: real costs like housing and
children, the tax rules that change what you keep, how your retirement income gets taxed once
you start drawing it, and what we don't model yet.
1. Housing costs
A mortgage payment is fixed in cash terms, exactly like the real thing, so as prices rise
its true cost falls in real terms the longer you hold it.
If you're on track to own outright by retirement, your modelled housing cost drops to zero
from the year that happens. If you're still paying it off, or renting, that carries on being
charged.
Renting is modelled as a flat cost in today's money that continues right through retirement:
unlike a mortgage, rent never gets "paid off".
A future house purchase or move is checked against what you can genuinely afford at the time
you say you'll make it, using your real savings, income and Stamp Duty Land Tax at current UK
rates and thresholds, not just the headline price you type in.
Nursery, school and university costs are worked out from each child's own birth year,
arriving on a schedule and stopping again once that stage ends, not charged as one flat
number across their whole childhood.
Government childcare support is modelled properly rather than assumed away: the universal
15 hours from age 3, the extended working-parent hours (available from 9 months old, subject
to both parents working and an income limit), and Tax-Free Childcare, each with its own
eligibility rules.
Where the numbers make it worthwhile, the plan checks whether directing more into a pension
both reduces your tax bill and requalifies you for free childcare hours you'd otherwise lose
above £100,000 of income (see the £100,000 taper, below).
Money saved into a Junior ISA for a child is treated as theirs: a gift that pays out to them
at 18, never counted as part of your own household wealth.
If you've added private school fees, they're assumed by default to rise 2% a year faster
than general inflation, reflecting the long-run pattern for UK independent schools, an
assumption you're free to edit.
Once your income passes £100,000, your tax-free Personal Allowance starts to taper away.
For a household with an eligible child, free childcare hours can taper away too, on their
own separate income test (see Children's costs, above).
Where a pension contribution can bring your income back under £100,000, the plan accounts
for both of these thresholds together, so a contribution big enough to clear the tax trap
and restore lost childcare hours is treated differently from one that only clears the
tax side.
Either way, this stays inside your own pension Annual Allowance, the yearly cap on how much
can go into a pension with tax relief.
Every withdrawal you take from a pension is split as it's taken: 25% comes out tax-free,
and the other 75% is added to your taxable income for that year and taxed through the normal
UK income tax bands.
That taxable portion is stacked alongside any state pension and defined-benefit pension
income you're also receiving, not taxed in isolation.
There's no single upfront tax-free lump sum unless you choose to take one; each individual
withdrawal carries its own 25/75 split.
Every withdrawal is sized to net you what you actually need to spend that year, after that
tax is applied, not before it.
The 25% tax-free portion isn't unlimited. It's tracked cumulatively, per person, against a
lifetime cap of £268,275. Once you've used it up, every further withdrawal from that
pension is fully taxable, with no tax-free portion left to draw on.
Day-to-day spending in retirement draws first from instant-access cash and Premium Bonds.
Then from your General Investment Account, ISA, pension and Lifetime ISA, in whichever
order you've set for your own plan.
The cash you've chosen to hold back as an emergency buffer is treated separately from all
of that: it's protected first, and is the very last thing touched, only if a genuine
shortfall would otherwise occur.
7. How your sustainable-spending figure is worked out
The "how much could you spend" figure isn't a rule of thumb like "4% a year". It's worked out
directly from your own numbers, so that what's left after tax covers what you'd actually need
to spend, for every year of your plan, not just the first one.
Aelyx handles a standard salaried household end-to-end. A few situations aren't modelled yet:
Business and self-employed income. We only model salaried income for now.
If you're self-employed or paid through your own company, approximate it as a salary for now.
Proper support is coming.
A second property. We only model the home you live in. A buy-to-let,
holiday home or other second property isn't included yet. That's coming too.
Pensions and Inheritance Tax, from April 2027. Unused pension funds will
generally count toward Inheritance Tax from this date, under rules not yet finalised. We don't
model it yet. It doesn't affect the retirement age or sustainability figures shown elsewhere in
Aelyx, only what happens to money left over after you die. We'll add it once the rules are final.
This page describes the rules Aelyx applies and what they mean for your
numbers, not the engineering behind how those numbers are calculated. See also our
Financial Disclaimer, Terms of Use and
Privacy Policy. Questions: hello@aelyx.app.