Monte Carlo Retirement Simulator
Estimate your probability of not running out of money in retirement by running thousands of randomized market return simulations based on your savings, risk level and withdrawal rate.
Simulation Inputs
Start with your current age, savings, contributions and assumptions. You can also use the preset scenarios to quickly switch between conservative, balanced and aggressive portfolios.
Simulation Results
Run the simulator to see your retirement success probability and wealth distribution.
How the Monte Carlo Retirement Simulator Works
This Monte Carlo retirement simulator uses probability instead of straight-line projections. Each simulation path represents one possible future of yearly investment returns, savings and retirement withdrawals. By running thousands of paths, you get a distribution of outcomes instead of a single estimate.
1. Accumulation phase: growing your portfolio
From your current age until your retirement age, the tool:
- Starts with your current portfolio balance.
- Adds your annual contribution at the start of each year.
- Applies a random investment return based on your expected return and volatility.
2. Retirement phase: spending and market risk
Once you reach retirement age, the simulator:
- Calculates your first-year spending using your withdrawal rate (e.g. 4% rule).
- Subtracts this spending from your portfolio.
- Applies another random investment return for the year.
- Increases your spending each year by the inflation rate you set.
A path is counted as a failure if your portfolio balance hits zero before your chosen end age. The success probability is the percentage of paths that never hit zero.
3. Understanding the terminal wealth distribution
At the end of all simulations, you will see:
- 10th percentile: downside scenario where only 10% of paths end with less money.
- 50th percentile: median scenario (half of paths end above, half below).
- 90th percentile: upside scenario with strong market performance.
These percentiles help you see both how bad things could get and how good they could be under the assumptions you chose.
4. Using the scenario presets
The scenario buttons are quick starting points:
- Conservative: lower returns, lower volatility, slightly lower withdrawal rate.
- Balanced: moderate returns and risk, similar to a classic 60/40 portfolio.
- Aggressive: higher potential returns, higher volatility and slightly higher withdrawal risk.
You can start with a preset and then fine-tune the assumptions to match your own situation.
5. Important reminder
This Monte Carlo retirement simulator is an educational tool. It does not guarantee any particular investment outcome and should not be considered personal financial advice. Real-world results depend on asset allocation, taxes, fees, behavior and many other factors.
Frequently Asked Questions
What is a Monte Carlo retirement simulation?
A Monte Carlo retirement simulation uses thousands of randomized market return paths to estimate how likely your investment portfolio is to last through retirement given your savings, spending and risk assumptions.
How should I interpret the success probability?
The success probability is the percentage of simulated futures where your portfolio never reaches zero before your target end age. A higher percentage generally indicates a more comfortable margin of safety, but no probability is ever a guarantee.
What is considered a “good” success rate?
Many financial planners consider success rates in the 80%–95% range reasonable, depending on your risk tolerance, flexibility and other sources of income. Some people aim higher for peace of mind.
What return and volatility numbers should I use?
Typical long-term nominal return assumptions for diversified portfolios fall between 5% and 8%, with volatility often in the 10%–20% range. Conservative investors might choose lower returns and lower volatility, while aggressive investors may use higher values.
Does this simulator account for inflation?
Yes. Your retirement spending is increased each year based on the inflation rate you enter. Investment returns are modeled in nominal terms, and spending grows over time in the same units.
Is the 4% rule guaranteed to work?
No. The 4% rule is a historical guideline, not a guarantee. Monte Carlo simulation helps you see how a 4% withdrawal rate might perform under a wide range of potential futures instead of one fixed scenario.
Can I use this for early retirement and FIRE planning?
Yes. If you plan to retire early, increase the number of years in retirement and test lower withdrawal rates, higher contributions or more conservative assumptions to see how they change your success odds.
Does this simulator include taxes and fees?
No. This tool works on a pre-tax, pre-fee basis. Real-world results will be lower after taxes, investment management fees and transaction costs.
How accurate are the probability estimates?
The results are only as good as the assumptions used. Monte Carlo simulation does not predict the future; it illustrates a wide range of plausible outcomes based on your inputs and the randomness of returns.
Is this a substitute for professional financial advice?
No. This simulator is for education and planning discussions only. For personalized recommendations based on your full financial situation, speak with a qualified financial professional.