What does a Monte Carlo retirement calculator do?

It runs your plan many times, 1,000 here, each with a different made-up sequence of yearly returns, and counts how often the money lasts. A plan with a steady 5% return either works or fails; a simulation shows how much depends on when the bad years arrive.

What success rate should I aim for?

There is no correct number. A higher share means fewer paths ran out, usually bought by spending less, saving more or working longer. Real people often cut back after bad years, which this model does not, so a lower share is not the same as a plan that fails.

Where do the return and volatility come from?

From you. The defaults are round assumptions, not figures fitted to market history, so change them to see how sensitive the answer is. A lower average or a higher volatility lowers the share.

Why does the same plan give the same answer every time?

The random returns are generated from a seed taken from your inputs, so the same inputs always give the same paths. Change any input and you get a fresh set.

Monte Carlo retirement calculator

See how often your savings last to the age you choose when returns go up and down, across a thousand simulated market paths.

Spending $50,000 a year from 60, the money lasted to 95 in

61% of paths

614 of 1,000 simulated return paths, starting from $1,137,064 at 60, with returns averaging 5% above inflation and a volatility of 15 points. In the paths that ran out, the median age it happened was 84. No Social Security or pension is counted: enter yours below.

This is a model of uncertainty, not a forecast: the share depends on the return and volatility you assume.

Your age nowFrom 18 to 85.Age you stop workFrom 30 to 85.Money must last to ageFrom 60 to 110.Savings and investments todayFrom 0 to 50,000,000.$Saved each year until you stopFrom 0 to 5,000,000.$Yearly spending once you stopIn today's money. From 0 to 2,000,000.$Social Security or pension, a yearYour own estimate, today's money. 0 for none. From 0 to 500,000.$Age it startsFrom 40 to 90.Average return above inflation, %Your assumption, not a sourced figure. From -5 to 12, up to 2 decimal places.Volatility, percentage pointsHow far a year's return swings around the average (one standard deviation). Your assumption, not a sourced figure. From 0 to 40, up to 2 decimal places.

The balance at the start of each age across the paths, today's money: a bad path (10th percentile), the middle path and a good path (90th).
Age	Bad path	Middle	Good path
60	$1,137,064	$1,137,064	$1,137,064
65	$675,826	$1,113,429	$1,725,168
70	$404,954	$1,057,109	$2,168,249
75	$189,787	$1,013,051	$2,545,716
80	$0	$933,972	$3,084,791
85	$0	$850,424	$3,755,972
90	$0	$742,601	$4,357,509
95	$0	$564,267	$5,442,500

Each year's return is drawn on its own from a bell curve. Real markets have worse crashes than a bell curve allows, bad years that cluster, and long stretches of low returns, so treat the share as a rough guide. Not modeled: tax, fees, spending that changes with age or is cut after a bad year, and returns in the years before you stop (they grow at the average). The link carries your figures after the #, so you can save or share it. Your figures are not sent to us.

The order of the years matters

Two people with the same average return can end very differently. If the bad years come early, while you are taking money out, you sell more of the portfolio at low prices and that money is not there for the recovery. If they come late, the pot has already grown.

A simulation shows that spread. The table under the calculator gives a bad path, the middle path and a good path, so you can see what the same plan looks like in each.

Questions people ask

What does a Monte Carlo retirement calculator do?: It runs your plan many times, 1,000 here, each with a different made-up sequence of yearly returns, and counts how often the money lasts. A plan with a steady 5% return either works or fails; a simulation shows how much depends on when the bad years arrive.
What success rate should I aim for?: There is no correct number. A higher share means fewer paths ran out, usually bought by spending less, saving more or working longer. Real people often cut back after bad years, which this model does not, so a lower share is not the same as a plan that fails.
Where do the return and volatility come from?: From you. The defaults are round assumptions, not figures fitted to market history, so change them to see how sensitive the answer is. A lower average or a higher volatility lowers the share.
Why does the same plan give the same answer every time?: The random returns are generated from a seed taken from your inputs, so the same inputs always give the same paths. Change any input and you get a fresh set.