Planned Spending is in the Overspending Zone
Learn more about why you may see a notice that a plan is in the overspending zone
Last published on: October 31, 2025
For some plans, you may see the following alert:
“This plan's targeted spending level is in the 'overspending zone'. Its estimated risk of overspending is greater than 50%.”
The two major risks in any retirement spending plan are the risk of overspending (by spending too much and overtaxing portfolio and other resources) and the risk of underspending (and regretting not having experiences that were skipped because of worry during retirement). The goal of a retirement plan is to make sure people are living within their means, but also living a fulfilling life.
Typically, retirees will begin retirement with a plan that is within the underspending zone (more likely to be underspending than overspending), not in the overspending zone (more likely to be overspending than underspending). As time goes on, their spending may drift into the overspending zone. However, adjustments to the plan (including reductions in spending) typically aren't triggered immediately. Instead, people will wait until they are well within the overspending zone and they are more sure that an adjustment is needed. If they adjust too quickly, they may find that conditions actually improved enough without an adjustment, and they may regret having overreacted.
This notice draws attention to the fact that, due to plan settings, the spending plan is estimated to be over the plan's resources. This may be because the plan is targeting a net-of-tax spending level that is higher than can be afforded, or because the plan has custom income settings. You can find a plan's details on a plan's income and guardrail settings in Advanced Settings > Income Settings.
Income Lab's default income & guardrail settings never target a higher than 40% chance of overspending (60% chance of underspending).
For more on overspending and underspending risk, please see the following articles.