What is a Monte Carlo retirement simulation?

Instead of assuming the market returns its average every single year, a Monte Carlo simulation replays your plan against many randomized return sequences — here, 1,000 of them — and counts how many survive. It exposes sequence-of-returns risk: the same average return arriving in a different order can break a retirement.

What success rate is good enough?

There's no official threshold, but 90%+ is generally considered sturdy, 75–90% workable if you can flex spending in bad years, and below 75% is leaning on luck. 100% usually means you're over-saving — real retirees adjust spending, which simulations don't.

Why is the median ending so different from the average?

Market outcomes are right-skewed: a few lucky runs compound into enormous balances and drag the average far above the typical result. The median — the middle run — is what a typical retirement actually looks like, which is why this tool reports percentiles rather than an average.

Are the results random every time?

No — the simulation is seeded, so the same inputs always produce the same answer. When you change an input and the odds move, that change is real, not noise.

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Monte Carlo Retirement Calculator

A single projection line assumes the market returns its average every single year. Real returns arrive in lumps — and a bad stretch early in retirement does damage an average can't undo. This replays your plan against 1,000 randomized market histories and counts how many survive.

Current age

Current balance

Saving per month

Years until retirement

yrs

Spending per year (today's $)

Years of retirement

yrs

Average return

Volatility (yearly swings)

Inflation

A diversified stock-heavy portfolio has historically swung ~15–18% a year; a 60/40 mix more like ~10–12%.

Odds your money lasts

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Typical ending (median)

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Unlucky (10th percentile)

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Lucky (90th percentile)

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The range of outcomes

10th–90th percentile cone Middle of the pack (median)

Worth knowing: randomized returns are drawn from a bell curve around your average — real markets have fatter tails (rare crashes worse than a bell curve predicts) and rebounds, so treat the odds as a comparison tool, not a guarantee. The runs are seeded — the same inputs always give the same answer, so changes you make are real, not noise. Spending is entered in today's dollars and inflated each year; balances shown are deflated back to today's buying power. Taxes and account-access rules aren't modeled here.

Why one smooth line lies to you

Every simple retirement calculator draws a single curve: your balance compounding at 7% a year, forever, like clockwork. The market has never once done that. It returns +26%, then −18%, then +11% — and when you're withdrawing, the order matters enormously. A crash in year two of retirement forces you to sell depressed assets to eat, and the portfolio may never recover, even if the long-run average ends up exactly 7%. The same crash in year twenty is a shrug. This is sequence-of-returns risk, and averaging hides it completely.

A Monte Carlo simulation confronts it directly: run the same plan through 1,000 different market histories — each drawing yearly returns at random around your average — and count the survivors. The answer isn't "you'll have $2.1M"; it's "your plan works in 87% of markets," which is a more honest shape for the truth.

How to read the cone

The chart shows the middle of the distribution: the median run (the line) and the 10th-to-90th percentile band (the cone). Half of outcomes land above the line, half below; one run in ten finishes above the cone and one in ten below. Two habits worth forming:

Plan around the median, not the average. A handful of lucky runs compound into fortunes and drag the average far above what typically happens. The median is the honest "expect roughly this."

Watch the bottom edge. The 10th percentile is your bad-luck rehearsal — not a catastrophe scenario, just a normal unlucky market. If that line hits zero while you're alive, the plan is thinner than the headline odds suggest.

What the success rate means — and what it doesn't

90%+ is generally sturdy. 75–90% is workable if you can flex — real retirees cut spending in bad years, which a fixed-spending simulation doesn't credit — so the figure is a floor for someone who can genuinely cut back. Below 75% leans on luck. And 100% usually means you're over-saving: the simulation's worst-case markets are rare, and insisting on surviving all of them means working years longer than the typical outcome required.

Common questions

Why do the odds not change when I re-run it?

The simulation is seeded — the same inputs always produce the same 1,000 histories. That's deliberate: when you nudge your savings rate and the odds move from 84% to 88%, you can trust the change came from your input, not from a fresh roll of the dice.

Is 1,000 runs enough?

For comparing plans, yes — the success rate stabilizes to within a point or two at 1,000 trials. More runs sharpen the third decimal place of a number whose real-world uncertainty (your actual future returns) dwarfs it.

What volatility number should I use?

Match it to your portfolio: ~15–18% for a mostly-stock portfolio, ~10–12% for a 60/40 mix, lower still for bond-heavy allocations. Higher volatility widens the cone and lowers the odds at the same average return — that's the price of the stock premium made visible.

Does this account for taxes or which accounts I hold?

No — this sandbox treats your savings as one pot. Withdrawal taxes, RMDs, Roth conversions, and the 59½ access rules all change the real answer, which is exactly what the full Tesserae plan layers on top of this same engine.

Run these odds against your real plan

Tesserae's Plan runs this same simulation over your actual accounts, savings stages, Social Security, taxes, and RMDs — one verdict, with the odds built in. Privacy-first: you enter your own numbers, and we never touch your bank login.

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