Wealth Ladder Guide

Companion worksheet

Retirement/Liquidity Worksheet

Build a clear plan for Annual Funding Gap, spending protection, and long-term Core capital.

Put the structure to work

Retirement/Liquidity Structure

A structural view of annual household needs, Annual Funding Gap, Liquidity, and long-term capital.

This educational model is not a guarantee or an individualized financial recommendation.

Your starting point

A few numbers.
One clear picture.

Annual Funding Gap (G) is the expected annual household need not covered by Stable Funding and therefore requiring support from the wealth structure. On this worksheet, do not assume Stable Funding fully covers essential needs: G includes any uncovered essential needs as well as irregular or discretionary needs.

01

Essential annual household needs before Stable Funding.

02

Annual stable income applied against total household needs; it may not fully cover essential needs.

03

Expected irregular, periodic, and discretionary household needs.

04
Usable Core Rate
Added margin: 3%

The usable rate is a Core support-capacity reference for the Annual Funding Gap. A lower rate requires more Core capital and leaves more planning margin.

Liquidity Buffer (B)
7 years

Liquidity Sizing Amount = max(G, 25% of annual household spending). Practical sizing: L = B × max(G, 25% of annual household spending).

Protection in Place

Coverage against major unforeseen financial losses, such as homeowners, auto, health, disability, life, and liability insurance. Protection transfers or limits major financial risks, while Emergency Liquidity provides cash for disruptions and expenses that must be absorbed directly.

Your essential structure

Your Liquidity and Core targets need additional capital

Additional capital needed
Capital Available$1,000,000Total capital entered by the user
Liquidity Allocated$189,000Capital assigned to required Liquidity
Core Available$811,000Capital Available less Liquidity Allocated
Liquidity Required$189,000
Core Required$900,000Core required to support Liquidity
Liquidity + Core Required$1,089,000Liquidity required $189,000 + Core required $900,000 = $1,089,000
Additional Capital Needed$89,000Required capital exceeds Capital Available.

Inside Allocated Liquidity

For Liquidity sizing, use the Annual Funding Gap (G) or 25% of annual household spending, whichever is greater, then multiply by the selected Liquidity Buffer (B) in years. Planned Liquidity and Emergency Liquidity each equal the Liquidity Sizing Amount; they remain separate because Planned covers anticipated needs and Emergency covers unexpected needs. Runway Liquidity provides time protection through an extended disruption or recovery period and equals (B - 2) times the Liquidity Sizing Amount. When G is at least 25% of annual household spending, the practical formula reduces to the book's familiar L = B G structure.

Liquidity Sizing Amount = max(G, 25% of annual household spending)

Practical sizing: L = B x max(G, 25% of annual household spending)

When G is less than 25% of annual household spending, this simplified approach produces more Liquidity than a calculation based strictly on the actual funding gap. The difference provides an additional margin of protection while preserving a simple, consistent sizing rule.

Liquidity target: $189,000

Planned (1 year)$27,000Emergency (1 year)$27,000Runway (5 years)$135,000

Runway Liquidity is sized to cover at least B - 2 years of the current Annual Funding Gap (G), assuming Stable Funding continues at the expected level. When the 25%-of-spending minimum is greater than G, the additional amount provides extra margin. This is a sizing objective, not a guarantee that the money will last exactly that many calendar years under all future conditions.

Core Required to Support Liquidity

$27,000 Liquidity Sizing Amount ÷ 3% usable rate = $900,000

Core Required to Support Liquidity at 4%

$27,000 Liquidity Sizing Amount ÷ 4% = $675,000

Core support uses the same Liquidity Sizing Amount as Emergency and Runway: max(G, 25% of annual household spending). The 4% figure is a mathematical reference. The selected lower usable rate provides additional margin for market variability, fees, taxes, inflation, and Liquidity replenishment. It is not a guaranteed return or withdrawal rate. With C as Core capital and s as the support ratio, s = G / C. When G is at least 25% of annual household spending, L = B G and L / C = B s.

Core Available
$811,000
CORE SHORTFALL
$89,000
Protection
In place

Amount by which Core Available falls below Core Required.

Core Shortfall = max(0, Core Required − Core Available)

Wealth Ladder Guide

The Liquidity Equation

Retirement/Liquidity Worksheet

wealthladderguide.comPrinted:

Current inputs

Annual Essential Household Needs
Stable Funding
Annual Irregular and Discretionary Household Needs
Annual Funding Gap (G)
Capital Available
Selected Usable Core Rate
Selected Liquidity Buffer (B)
Protection in Place

Annual Funding Gap (G) is the expected annual household need not covered by Stable Funding. It includes uncovered essential needs as well as irregular or discretionary needs.

Protection in Place: Coverage against major unforeseen financial losses, such as homeowners, auto, health, disability, life, and liability insurance. Protection transfers or limits major financial risks, while Emergency Liquidity provides cash for disruptions and expenses that must be absorbed directly.

Liquidity and Core Capital Plan

Capital Available
Liquidity Allocated
Core Available
CORE SHORTFALL
Liquidity Target
Core Required to Support Liquidity
Liquidity + Core Required
Core Required to Support Liquidity at 4%
Capital Assigned to Liquidity + Core
Capital Remaining After Liquidity and Core

Amount by which Core Available falls below Core Required.

Core Shortfall = max(0, Core Required − Core Available)

Inside Allocated Liquidity

For Liquidity sizing, use the Annual Funding Gap (G) or 25% of annual household spending, whichever is greater, then multiply by the selected Liquidity Buffer (B) in years. Planned Liquidity and Emergency Liquidity each equal the Liquidity Sizing Amount; they remain separate because Planned covers anticipated needs and Emergency covers unexpected needs. Runway Liquidity provides time protection through an extended disruption or recovery period and equals (B - 2) times the Liquidity Sizing Amount. When G is at least 25% of annual household spending, the practical formula reduces to the book's familiar L = B G structure.

Liquidity Sizing Amount = max(G, 25% of annual household spending)

Practical sizing: L = B x max(G, 25% of annual household spending)

When G is less than 25% of annual household spending, this simplified approach produces more Liquidity than a calculation based strictly on the actual funding gap. The difference provides an additional margin of protection while preserving a simple, consistent sizing rule.

Planned (1 year)
Emergency (1 year)
Runway (5 years)

Runway Liquidity is sized to cover at least B - 2 years of the current Annual Funding Gap (G), assuming Stable Funding continues at the expected level. When the 25%-of-spending minimum is greater than G, the additional amount provides extra margin. This is a sizing objective, not a guarantee that the money will last exactly that many calendar years under all future conditions.

What This Means

Equations used

Liquidity:

Core Required to Support Liquidity:

Core Required to Support Liquidity at 4%:

Foundational Liquidity relationship: L = B G. Practical sizing rule: L = B x max(G, 25%H). When G is at least 25% of H, the two are identical.

Ratios: s = G / C; when G is at least 25% of annual household spending, L / C = B s.

The 4% figure is a mathematical reference. The selected lower usable rate provides additional margin for market variability, fees, taxes, inflation, and Liquidity replenishment. It is not a guaranteed return or withdrawal rate.