Hi Kevin,

Here's my short version. From your questions, it's probably worthwhile to view the videos here: https://www.esplanner.com/learn-more#

Basically, ESPlanner takes all of your assets, income streams, "mandatory" expenditures (off the top expenditures listed above) along with your expected rates of return, inflation, taxes, etc. and calculates your available "consumption" or discretionary money which can be used for spending, investing, gifts, or any other purpose you choose in a given year. It does this for all of your remaining years for yourself and spouse.

In your example, the $3,000 / month in consumption can be spent as you choose and is an output of the program and not a input. This $3,000 could be used for car payments, food, travel, utilities, gifts, medical expenses or anything else...it's your choice.

In some cases, the program is not able to "smooth" your consumption (meaning level consumption in real dollars year after year), but it tries to do this given your financial constraints. You can change your inputs to the program (e.g. change your Social Security start dates, pay off mortgage early, or any other change) and see if the changes are beneficial and by how much they either smooth or raise your consumption. Of course, the changes may not be beneficial, but there is no way of knowing that in advance without testing.

One caution is that you may not want to spend 100% of the consumption the program recommends. The reports show the maximum amount if reality exactly matches your assumptions and inputs. There's always a chance reality will be tougher than your expectations so you could choose to spend less than the recommendations by some amount ($ or %). I call this a "safety factor" approach and describe it in other posts.

Regarding Monte Carlo (MC), the consumption is calculated in much the same way except that your expected rates of return will vary annually. The reports will show what happens if your results are better/worse than "average" returns and the impact on your consumption. You may see that ~80% of the time your results are better than $3,000 per month. In this case, the odds are probably in your favor (assuming the rest of your profile inputs are realistic). However, you may find that your consumption is shown to be less than $3,000 / month around 80% of the time which should be a warning flag that you may not be as safe as you want and should likely make changes to compensate.

It's a lot to take in at once, but go through the videos and set up a "simple" profile to get comfortable with that. Then, over time, as you want to dig into an area go through the Forum posts and adjust your profile. Personally, I would delay Monte Carlo for a while until you really feel solid with the rest of the concepts and how they apply to your specific profile.

I hope this is helpful.

Best,
Brian

Yes, "discretionary" is discretionary and not reinvested--it could all be spent on ice cream. The model is showing you what is left after the off-the-tops detailed in the Total Spending report.