Retirement simulations
Understand why the plan tests many market paths and what the resulting range can—and cannot—tell you.
A retirement simulation asks the same plan to live through many possible sequences of market returns. Income, spending, retirement timing, accounts, and other plan inputs stay the same while investment outcomes vary.
Why one projection is not enough
An average return can produce a neat line, but real markets do not deliver the average every year. A poor stretch early in retirement can be harder to recover from than the same returns arriving later, especially when withdrawals are being taken.
Running many paths reveals a range: some outcomes finish with more than expected, some finish with less, and some deplete investable assets before the planning horizon.
How to read the results
Probability of Success summarizes how many paths avoid depletion. Percentiles and distributions show the range of ending balances. Individual paths show how a particular sequence developed year by year.
No single view tells the whole story. A “successful” path could finish with very little, while an “unsuccessful” path could miss the horizon by only a short time. Look at the amount and timing of shortfalls as well as the headline percentage.
What simulations leave out
Simulation results are conditional on the model. They cannot include every future tax change, market event, expense, decision, or behavioral response. They also assume the plan follows its entered rules even though a real household may adapt.
Use simulations to compare choices under the same assumptions and to find where the plan is sensitive. They are a way to think clearly about uncertainty—not a machine for predicting the future.