A single average return hides the real risk in retirement: a few bad years at the wrong time. This simulator plays out thousands of random market paths for your savings, contributions and spending, and shows how often the money lasts, plus the range of balances you could end up with.
Enter your ages: now, at retirement and the age your plan should last until.
Add your savings, yearly contribution and how fast contributions grow.
Set your retirement spending in today's money and any pension or Social Security income.
Choose market assumptions or a preset mix, then press Run simulation.
Read the success rate, explore the percentile chart and test lower or higher spending in the table.
How the simulation works
Before retirement, each year: balance = balance × (1 + return) + contribution, and the contribution then grows by your raise percentage.
In retirement, each year: the amount needed is spending × (1 + inflation)years from now minus other income (also inflation-adjusted, once it has started). It is withdrawn at the start of the year and the rest is invested for the year.
If a withdrawal is larger than the balance, the path fails and the age is recorded.
Returns are random each year: growth factor = eμ + σZ, a lognormal model matched to your average return and volatility.
After all paths are run, the tool sorts the balances at every age to find the 10th, 25th, 50th, 75th and 90th percentiles.
Today's-money values divide each nominal balance by (1 + inflation)years, so a figure can be compared with what money buys now.
Reading the percentile bands
Line or band
Meaning
Median (dark line)
Half of the paths end above it and half below: the typical outcome.
25th–75th percentile (darker band)
The middle half of outcomes.
10th–90th percentile (light band)
Eight out of ten outcomes. The bottom edge is a poor but realistic market.
Paths with money left
The share of simulations still above zero at that age.
Ways to improve a low success rate
Spend a little less in the first years of retirement; the spending table shows how much each 10% matters.
Work one to three years longer: more contributions, more growth and fewer years to fund.
Delay Social Security or a pension if that raises the yearly payment, so savings carry less of the load later.
Review volatility, not just return: a slightly lower but steadier return can raise the success rate in retirement.
Plan to be flexible: being willing to trim spending after bad market years makes a real plan safer than this fixed-spending model shows.
Frequently asked questions
What is a Monte Carlo retirement simulation?
It is a way to test a retirement plan against many possible futures. Instead of assuming the same return every year, the simulator draws a random return for each year from a distribution with your chosen average and volatility, runs your savings and withdrawals through that path, and repeats this thousands of times. The share of paths in which the money lasts is the success probability.
What success rate should I aim for?
Many planners treat roughly 80% to 90% as a reasonable target. A 100% result often means you are under-spending, while anything below about 70% suggests the plan relies on good luck. Remember that real people adjust, cutting spending after bad years, which the simulation does not model.
How are the random returns generated?
Each year's return is drawn from a lognormal distribution whose arithmetic mean and standard deviation equal the return and volatility you enter. With mean m and volatility s, σ² = ln(1 + s²/(1+m)²) and μ = ln(1+m) − σ²/2, and the growth factor is e^(μ + σZ) for a standard normal Z. A lognormal model cannot lose more than 100% in a year.
Why does the median result differ from a simple compound-interest calculation?
Volatility drags down compound growth: the typical (median) path grows at about the geometric return, which is lower than the average return by roughly half the variance. A 7% average return with 15% volatility compounds at roughly 6% in the middle path. Withdrawals during down years make the effect stronger, which is called sequence-of-returns risk.
What return and volatility should I use?
Use long-term, nominal yearly figures for your actual mix of investments, and be conservative. As a rough guide, broad stock indexes have historically shown volatility around 15% to 20% a year, bonds much less, and balanced 60/40 portfolios around 10%. Past returns are no guarantee of future results.
Does the simulator include taxes and fees?
No. Enter spending as the gross amount you will withdraw, including the tax you expect to pay on it, and lower the expected return by your fund and advisory fees. All figures are yearly; contributions are added at the end of each year and withdrawals are taken at the start of each retirement year.
Is this financial advice?
No. It is an educational planning tool that runs entirely in your browser; your numbers are not uploaded. Results depend on assumptions that may not hold, so consider reviewing important decisions with a qualified financial professional.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.