Probability of success
Understand what the simulation result counts, what it leaves out, and how to use it when comparing plan choices.
Probability of Success is the percentage of simulated market paths in which your plan does not run out of investable assets before the end of the planning horizon.
A simple example
Suppose Alpha Retire runs 1,000 simulations. Each one starts with the same plan—your savings, spending, income, retirement date, and other inputs—but uses a different possible sequence of market returns.
If investable assets last through the final plan year in 850 of them, the Probability of Success is 85%.
That does not mean there is an 85% guarantee that your real retirement will work exactly as planned. It means the plan lasted in 85% of the market paths tested, using the assumptions currently in the model.
What the score leaves out
The percentage does not show how each simulation ended. An unsuccessful path might run out of investable assets one year early or twenty years early. A successful path might finish with $1 or with a substantial balance.
It is better to read a lower score as a greater chance that the plan may need an adjustment under difficult conditions—not as a prediction that retirement will fail. People can respond by changing discretionary spending, working longer, saving more, or revisiting other choices.
Is a higher percentage always better?
A higher percentage generally means the plan is more resilient. But 100% is not automatically the right goal. Reaching it may require spending much less, retiring later, or leaving more money unused than you want.
There is no universal target. The result depends on how cautious your assumptions are and how much flexibility you have. A plan built mostly around essential expenses may call for a larger margin than one with spending that could be reduced.
How to use the result
Treat Probability of Success as a comparison tool rather than a grade:
- Compare choices using the same assumptions. See how retirement timing, spending, saving, or asset allocation changes the result.
- Look beyond the percentage. Review ending balances and when assets are depleted in difficult simulations.
- Revisit the plan regularly as balances, goals, and circumstances change. Ask what you would be willing to adjust if the plan begins to move off course.