Portfolio & Spending
$
$
years
%
Asset Allocation
60% Stocks
40% Bonds
Advanced Settings
runs
Simulation Results
Success Rate
0%
Portfolio survives
Initial Withdrawal Rate
0%
Of portfolio value
Safe Withdrawal Rate
0%
95% success target
Median Final Balance
$0
After 30 years
Portfolio Success Probability
0%
Success

Monte Carlo Portfolio Paths
Success Rate by Withdrawal Rate
Spending Over Time
Sequence of Returns Risk

📚 The 4% Rule

  • Trinity Study: Research showing 4% initial withdrawal has 95% success over 30 years
  • Inflation-Adjusted: Withdraw 4% first year, then increase by inflation
  • 60/40 Portfolio: Based on 60% stocks, 40% bonds allocation
  • Historical Data: Uses market returns from 1926-1995
  • Success Defined: Portfolio lasts the full retirement period
💡 Pro Tip:

The 4% rule is a starting point. Adjust based on your allocation, spending flexibility, and retirement length.

🎲 Monte Carlo Simulation

  • Random Returns: Simulates thousands of possible market scenarios
  • Normal Distribution: Returns vary around historical averages
  • Real Risk: Captures sequence-of-returns risk
  • Success Rate: Percentage of scenarios where money lasts
  • Conservative: Target 85-95% success for safety margin

⚠️ Sequence of Returns Risk

  • Early Losses Hurt: Bad returns early in retirement are devastating
  • Withdrawal Amplifies: Selling in downturn locks in losses
  • Order Matters: Same average returns, different outcomes
  • Mitigation: Lower withdrawals in bad years, higher stock allocation later
💡 Pro Tip:

Consider dynamic spending strategies that reduce withdrawals during market downturns.

📈 Withdrawal Strategies

  • Fixed %: 4% rule - simple but inflexible
  • Dynamic: Adjust spending based on portfolio value
  • Guardrails: Increase/decrease spending at thresholds (Guyton-Klinger)
  • Floor-Ceiling: Minimum spending needs + discretionary cap

🎯 Asset Allocation Impact

  • Higher Stocks: Higher growth potential, more volatility
  • 100-Age Rule: Stocks = 100 - Your Age (e.g., 60% at age 40)
  • Bonds Cushion: Reduce sequence risk in early retirement
  • Rebalance: Maintain target allocation for consistent returns

🚀 Optimization Tips

  • Use flexible spending in good/bad years
  • Consider part-time work early in retirement
  • Delay Social Security to increase guaranteed income
  • Keep 2-3 years expenses in bonds/cash
  • Tax-loss harvest in down years
  • Consider Roth conversions in low-income years