Monte Carlo Retirement Calculator

Monte Carlo Retirement Calculator

We're now ready for an improved calculator that lets you include volatility in your plans. The "Monte Carlo" in the title doesn't mean that the odds are against you and you're going to crap out in the big casino of life; it's the generic term used for a computer model that runs many random iterations and lets you see your chance of meeting your goal.
The inputs are different than the previous calculators. This time you specify your desired annual withdrawal amount as well as the number of years you want the account to last; together, those two numbers form your goal
The output is also different. This time you get a probability distribution - sort of a lopsided "bell curve" - showing your chance of success and failure. The red portion of the curve is the chance of failure - outcomes where the money will run out too early. The number at the top of the graph is your overall chance of success.

Introduction
Standard Deviation
Lowered Expectations
Uncertainty
Monte Carlo Calculator
Books & Links

Pre-Retirement:
Principal $
Contributions: $
r: %
Volatility: %
Years:

During Retirement:
r: %
Volatility: %
Years:
Withdrawals: $
calc withdrawal amt

You'll get a slightly different outcome each time you run. (That's what makes this a Monte Carlo calculator: it's doing the equivalent of running 1000 sets of orange bars from the previous page.) If you have a tall blue bar the the far right, that's a good sign - it indicates that there are other "success" outcomes to the right of what's shown on the graph.
If you aren't comfortable with the odds of success - if the "red zone of failure" is a little too big - then it's time to consider the strategies from the previous page: increasing your contributions during your working years, delaying retirement, and decreasing withdrawals after retirement.