The funded ratio answers a different question from your chance of success. Success rate asks how often did this plan survive across thousands of simulated market futures. Funded ratio asks is the money there at all, with no simulation involved:

funded ratio = what you have, in today's dollars ÷ what the plan owes, in today's dollars

At 100% you could cover the whole plan today. Above that you have a surplus; below it, a shortfall. The card sits on the Dashboard directly under Net worth today.

What 100% does and does not promise

At exactly 100%, your resources would precisely amortise your obligations if every dollar earned exactly the discount rate: you would spend down the portfolio, collect Social Security, pensions and any sale proceeds as they arrive, and finish at zero. That is the honest reading, and it is a genuinely useful one.

It is not a guarantee that the plan cannot run out of money. Four things survive a 100% reading:

• Timing. The funded ratio compares two totals in today's dollars. It never tracks a running balance, so it cannot see that money arrives in the wrong order. A plan leaning on a large windfall or property sale late in life to fund earlier spending can balance perfectly in present value while hitting zero years beforehand. This is the limitation that surprises people most.
• The rate is assumed, not locked. The default is your own bond return expectation - an average with variation around it, not a contracted yield. Genuinely defeasing the plan would mean actually buying a matched bond or TIPS ladder at today's rates. 100% says you could cover this if you earned that rate, not that you have.
• Taxes were priced under different conditions. The tax figure inside your obligations comes from the simulation's projected income mix. In a hypothetical all-bonds world that mix, and so the tax bill, would differ.
• It is funded to your plan-to age. 100% funded through 90 says nothing about living to 96.

So the precise claim is that at 100% your resources cover your obligations in present-value terms at that rate. The ways a fully funded plan can still fail are bad timing of resources, not achieving the rate, and outliving the horizon - which is exactly why the chance of success sits beside it rather than being replaced by it.

Why two different numbers

These two measures disagree on purpose, and the disagreement is informative:

• Funded but a lower success rate - you have enough, but the order of returns could still break the plan. A bad first decade forces selling into a downturn. That is sequence-of-returns risk, and it is exactly what the simulation exists to catch.
• Underfunded but a decent success rate - the plan is relying on markets doing better than the low-risk rate the funded ratio assumes. It may well work out; it just isn't guaranteed by the resources you hold today.

Because there is no randomness behind it, the funded ratio also moves smoothly and predictably when you change an assumption, where a success rate can jump around for reasons that are hard to read.

What counts as resources

Your investable portfolio today, plus the present value of every future income stream the plan projects: Social Security, pensions, annuities, a TIPS ladder, rental and other recurring income, and windfalls including the net proceeds of any property sale you have scheduled.

Two exclusions surprise people, and both are deliberate:

• Real estate and other assets are not counted at their current value. A house you live in and never sell cannot pay for groceries - its running costs are already an obligation and its value is a legacy asset. If you do plan to sell, the proceeds arrive as a windfall in the right year, already net of costs and tax, and they count then.
• Portfolio withdrawals are not counted as income. The portfolio is already on the books once, as an opening balance. Counting the withdrawals it funds would count the same money twice.

This is why the funded ratio can look strong while net worth looks weak, or the reverse. Someone with a large paid-off house and a thin portfolio will score lower than their net worth suggests - correctly, because they would have to sell or borrow to spend it.

What counts as obligations

Every projected outflow: recurring expenses, one-time expenses, debt payments, and taxes. Taxes are already inside the projected total, so they are never added on top.

Essentials vs full lifestyle

Once you set an Essential % on your recurring expenses, the card shows two ratios instead of one:

• Essentials funded - measured against only the portion of spending you marked as permanently required.
• Full lifestyle funded - measured against everything you plan to spend.

That split is usually the more useful reading. "Essentials 134%, full lifestyle 91%" says something a single number cannot: you will be fine, but the trips and the discretionary spending are the part at risk. Until you set any Essential %, all spending counts as essential, the two figures would be identical, and the card shows one.

The discount rate

Future dollars are worth less than dollars today, so both sides are discounted back to the present. The rate you pick is the most consequential assumption on this card, and a higher one always makes the plan look better funded.

The default is your own bond return expectation - a deliberately low-risk rate. Discounting at your expected portfolio return would assume the risky return arrives on schedule with certainty, which is precisely the criticism levelled at public pension funds that discount at 7%. "Funded" should mean you could cover this today, not that you will be fine if markets cooperate.

With Plus you can set the rate yourself from the card. The figure shown is always the one actually in use.

Reading it in nominal terms

The projected expenses being discounted are already inflated forward into future dollars, so the discount rate applied to them is a nominal one. If you have seen funded ratios computed with a real (after-inflation) rate elsewhere, note that the two are not interchangeable - mixing them overstates the ratio substantially.

Limitations worth knowing

• One-time expenses always count as essential. They carry no Essential % of their own, which makes the essentials figure slightly conservative for a plan with a large discretionary one-off.
• The essentials split is applied to recurring spending as a whole rather than year by year, so it is a good summary rather than a precise per-year figure.
• The ratio is a snapshot of the plan as it stands. It says nothing about sequence-of-returns risk - whether a bad early decade breaks a plan that has enough - which is what the success rate and the What-If Explorer are for.
• Separately, and more subtly, it cannot see when money arrives. Because it compares two present-value totals rather than following a balance year by year, a plan can read 100% funded and still run short in a particular stretch if its resources land later than its obligations. See "What 100% does and does not promise" above.