Monte Carlo Retirement Planner

Run thousands of simulated retirements with random market returns to see your real probability of success — not just an average. Now with stochastic lifespan, regime-switching returns, and probability of ruin by age.

Questions this answers — what you can actually figure out

Will my retirement savings actually last to age 95?
How does a bad market in year one change my odds?
Should I work two more years, or spend 10% less?
What's my probability of running out before I die?
Do I have a Social Security plan, or just a Social Security hope?
How much does a more conservative mix actually buy me?

Portfolio & Timeline

Current portfolio valueTotal investable assets today — 401k, IRA, brokerage, etc. Do not include home equity unless you plan to liquidate it.

Current age vs retirement ageThe gap between these drives your accumulation phase. Each extra year of saving and compounding significantly improves success probability.

Planning horizonIf mortality model is OFF, this is the age your portfolio must survive to. If ON, this is just the chart x-axis end — the simulation uses a sampled death age instead.

Annual contributionsHow much you add to the portfolio each year before retirement. Set to 0 if already retired. Contributions are timed mid-year for a more realistic compound effect.

Current portfolio value$500,000

Current age45

Retirement age65

Planning horizon (age)95

Annual contributions (pre-retirement)$20,000

Portfolio Mix

Stocks (equities)Historical US stock market: ~10% average annual return, ~15% standard deviation. Higher return, higher volatility.

Bonds (fixed income)Historical US bonds: ~4.5% average return, ~6% standard deviation. Lower return, lower volatility. Good for reducing sequence-of-returns risk in early retirement.

Cash / money market~2.5% average return, very low volatility. Acts as a buffer but drags long-term returns.

Blended return & volatilityComputed using a full covariance model (stock-bond correlation 0.20, stock-cash 0.0, bond-cash 0.10), not a simple weighted average. Volatility shown is the portfolio standard deviation.

Stocks 60%

Bonds 30%

Cash 10%

Total: 100% ✓

Blended expected return7.7%

Blended volatility (std dev)10.7%

Spending & Income

Annual spending in retirementTotal annual expenses in today's dollars. The simulation inflates this each year and applies the spending curve you select below.

Social Security / pensionAnnual SS and pension income at retirement age, in today's dollars. The simulation grows this each year with the SS COLA rate (which is separate from spending inflation).

Spending inflationAnnual rate at which your spending grows. Healthcare often runs 5-6% — consider a higher rate if healthcare is a large share of your budget.

SS / pension COLASocial Security has its own cost-of-living adjustment, which historically lags broad inflation. Many pensions have only partial COLA or none. The default 2.5% reflects SS's typical lag vs general inflation.

Spending curveResearch suggests retirees do not spend at a constant real rate. The "retirement smile" shows lower spending in the 70s and rising healthcare costs in the 80s+. "Rising healthcare" models a linear cost increase over 25 years.

Annual spending in retirement (today's $)$60,000

Social Security + pension (today's $)$20,000

Spending inflation3.00%

SS / pension COLA2.50%

Spending curve over retirement

Lifespan Model

Fixed horizonPortfolio must last until your planning-horizon age. Simple but pessimistic: every simulation assumes you live to the worst case.

Mortality tableEach simulation draws a death age from a Gompertz hazard model calibrated to SSA-style life tables. Portfolio only needs to outlast you, not survive to a fixed age. This is how institutional retirement software works.

Male / Female / JointMedian death age from 65: Male ~84, Female ~87, Joint (longer of a couple) ~90. 10% of each group survives well past those targets.

When mortality is onThe "horizon" slider becomes just the chart's x-axis end. Success is measured as: did the portfolio outlast you, with a positive balance at death (above your target legacy if set)?

How long must the portfolio last?

Scenario Settings

Sequence of returnsA major bear market in the first years of retirement is far more damaging than the same crash later, because you sell depressed assets to fund spending. "Bad decade first" forces the first 3 retirement years into the crisis regime.

Return regimeReal markets exhibit fat tails — rare years with returns far worse than a normal distribution predicts. Crisis regime adds a 10% annual probability of a stress year (mean -18%, vol 30%). This produces more realistic tail risk than pure lognormal.

Number of simulationsMore simulations = smoother probability estimate. 5,000 is the recommended minimum for retirement planning; results stabilize meaningfully at this count. 10,000 is more rigorous but slower.

Sequence of returns

Return regime (fat tails)

Simulations

Success Definition

Target ending balanceMinimum portfolio you want at end (horizon or death). Set to $0 if you just need the money to last. Set higher for legacy or late-life-care cushion.

Minimum floor balanceA run is marked as failure if portfolio drops below this at any point during retirement. Use for guaranteed minimum cushion (e.g. $50k for emergencies).

Your success targetProbability of success you personally consider acceptable. Most planners target 85-90%; conservative planners use 95%. The gauge color reflects your target.

Target ending balance (legacy / cushion)$0

Minimum floor (failure if portfolio drops below)$0

Your success target85%

--%

probability of success

Running simulation...

Median legacy

50th percentile balance at end

10th pct legacy

worst 10% of outcomes at end

90th pct legacy

best 10% of outcomes at end

Net annual withdrawal

spending minus SS/pension (today's $)

Withdrawal rate at retirement

% of median portfolio at retirement

Median failure age

when portfolio runs out (failed runs)

Portfolio value over time (percentile bands)

90th pct

Median (50th)

10th pct

Probability of ruin by age

Chance the portfolio has dropped to zero by each age, across all simulations.

When does the portfolio run out? (failed runs only)

What-if scenarios vs baseline

Spend 10% less per year--

Retire 2 years later--

Add $100,000 to portfolio now--

Reduce volatility by 20% (more bonds)--

Methodology: Returns are simulated with a lognormal model that, when crisis regime is on, mixes in a 10% annual probability of a stress year (mean −18%, vol 30%). Portfolio volatility uses a covariance model (stock-bond correlation 0.20). Cashflows are timed mid-year for a more realistic compound effect. Mortality, when enabled, draws death ages from a Gompertz hazard calibrated to SSA-style life tables (Male median 84, Female 87, Joint 90). Real markets also exhibit volatility clustering and shifting correlations not modeled here — results are illustrative, not predictive.

Frequently asked questions

Why does my probability of success change every time I run it? +

It actually does not change much. Monte Carlo runs thousands of random retirements; the percentage is just an average of how many succeeded. The difference between two runs of 5,000 simulations is typically less than 1%. If you want the most stable estimate, bump simulations to 10,000. If the number swings by 5%+ between runs, that's a sign your scenario is on a knife edge and the inputs need attention.

What's a realistic target percentage of success? +

Most financial planners target 85-90%. Below 70% is widely considered "high risk." Above 95% means you are almost certainly underspending and could safely enjoy more of your money. The Trinity Study, which produced the 4% rule, used 95% as its success bar over 30 years — modern planning has generally relaxed to 85% to balance security against overshooting savings.

Why is "bad decade first" so much worse than the same returns later? +

It's called sequence-of-returns risk. When you draw down a portfolio that just lost 30%, you sell more shares at the low to cover the same spending — permanently locking in losses that compounding would otherwise have recovered. The average return across your retirement could be identical; the order matters enormously. This is why the early years of retirement are the most fragile, and why bond ballast is more valuable then than later.

Should I trust the result if I use the mortality table option? +

With caveats, yes — it's how institutional retirement planning software works. A fixed horizon assumes you live to the worst case in every simulation, which over-saves for the average person. The Gompertz curve here is calibrated to SSA-style life tables. Caveats: it does not adjust for your individual health, family history, or income (longevity correlates with both). If you have strong reason to expect a longer-than-typical lifespan, stay on fixed horizon and set the age higher.

How does the model handle inflation? +

Spending and Social Security inflate separately. The spending-inflation slider grows your annual expenses each year. The SS-COLA slider grows your benefit each year, typically slower. Over 30 years, even a 0.5% gap between the two compounds into a significant real-dollar drag on the portfolio. The default 3.0% spending vs 2.5% SS-COLA reflects historical Social Security underadjustment relative to broad inflation.

What's the difference between "ending balance" and "floor"? +

Target ending balance is the minimum portfolio you want at the end (horizon or death). Set $0 if you just need the money to last; set higher for a legacy or late-life-care cushion. Floor is much stricter: a run is marked a failure if the portfolio ever drops below this level at any point in retirement, even if it recovers. Use floor when you need a guaranteed minimum cushion (e.g., $50k always available for emergencies).

What does this calculator NOT include? +

Several real-world effects: taxes (the portfolio is pre-tax; in reality, withdrawals from a 401k are taxed as income, and Roth/brokerage have different rules); required minimum distributions (RMDs from age 73+); healthcare shock costs (the spending curve is a smooth average, not the lumpy reality of a nursing-home year); long-term care insurance; home equity (HELOCs or reverse mortgages as backstops); part-time income in early retirement; and changing risk tolerance as you age. Use this as a stress test, not a withdrawal plan.

This calculator is for educational and informational purposes only. Results are estimates based on the inputs you provide and should not be taken as professional advice. Always consult a qualified professional for decisions involving investments, taxes, or financial planning.

Monte Carlo Retirement Planner

Frequently asked questions

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