This Monte Carlo Simulation is the generic term used for a computer model that runs many random iterations and lets you see your chance of meeting your goal.
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, and the output let you get a probability distribution - sort of a lopsided "bell curve" - showing your chance of success and failure. The number at the bellow of the graph is your overall chance of success.
You'll get a slightly different outcome each time you run. 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 then it's time to consider the strategies to increasing your contributions during your working years, delaying retirement, and decreasing withdrawals after retirement. |
