Monte Carlo Retirement Planning

Retirement planning is all about managing the unknowns. Nobody can be certain of how their investments will perform, how well they'll be able to stick to their savings plan, or how much they'll really need to spend in retirement. Yet, each of these variables must be estimated in order to build a solid retirement plan. To make matters worse, investment results are anything but uniform from year to year, and large variations in annual portfolio returns can wreak havoc on even the best retirement plans. Yet, despite all this, many seasoned financial planners are still using archaic tools that don't account for the uncertainty and volatility that's inherent in all long-term planning.

Fortunately, thanks to some powerful new retirement planning research, you are no longer constrained to those simple minded approaches. Breakthrough research has led to a new retirement planning approach called Monte Carlo Simulation. Monte Carlo retirement planning can be used to help manage the unknowns and give planners and future retirees better information about the risks and potential pitfalls hiding along the retirement road that lies ahead.

Monte Carlo Simulation is a planning technique that provides answers in the form of probabilities, or a likelihood of success. Instead of a simple yes or no, black and white answer, a Monte Carlo retirement calculator returns the percentage chance that the plan might work. A retirement plan with a 50% probability of success has the same chance of failing as it does succeeding. Odds like these that would leave most very unsettled. On the other hand, a plan with a 95% probability of success has only a one in twenty chance of failing. Now those odds would make for much sounder sleep.