Monte Carlo simulation results

The TIME MACHINE first projects your scenario using your own rates, then runs 100 market simulations using rates generated by the Society of Actuaries model. Spending guardrails may test additional rules, as described below.

The simulation results are attached to the scenario run. Use the Scenario button to view its regular TIME MACHINE results. You can save the run and its simulations as usual, and include the simulation results in your PDF report.

Reading the results

The success rate is the percentage of the 100 attempted simulations that had no cash-flow problem. A negative WALLET balance indicates a shortfall: the TIME MACHINE temporarily lends you the missing amount and requires repayment the following year. A simulation that cannot finish, for example because a loan cannot be amortized at the simulated rates, is reported separately and does not count as a success.

The legacy table compares your scenario with the minimum, 10th percentile, 25th percentile, median, 75th percentile, 90th percentile and maximum across completed simulations. The median is the middle result: half the values are below it and half above it.

The graphs show annual NET WORTH, NET WORTH excluding properties, and WALLET balances; CCPC owners also see the value of their business. The dark band contains the middle 50% of results, and the lighter band extends to the minimum and maximum. These show the range of outcomes produced by the model. A negative WALLET balance in some simulations identifies years when your plan may face cash-flow problems.

Spending guardrails: adjusting down and up

Guardrails explore whether flexible spending can improve a plan's resilience or allow you to enjoy more of your money. The first set of 100 simulations uses your original planned expenses. The search aims for a success rate between 90% and 95%, inclusive:

• Below 90%: test reductions in discretionary expenses in years following portfolio returns below your expected return.
• Above 95%: test increases in discretionary expenses in years following portfolio returns above your expected return.
• Between 90% and 95%: stop testing further rules.

Here, a good or bad year means returns above or below the expected return of your portfolio, not simply a positive or negative return. One rule can combine cuts after bad years with increases after good years.

Adjustments normally start at 10% and can reach 30%. If an increase takes success below 90%, a smaller adjustment may be tested. There are at most four sets of 100 simulations, including the original set. Every rule in a batch uses the same 100 market paths so that the comparison reflects the spending rules. Starting a new batch generates new paths.

The target may not be reached within these limits. Among tested rules with at least 90% success, the selected rule has the highest median lifetime spending in today's dollars. If none reaches 90%, the rule with the highest success rate is selected. Simulations of optimized runs retain their strategy and do not search for guardrail rules.

Why aim for 90%–95% success?

Requiring your budget to work in every simulated future can mean limiting spending to accommodate the most difficult market conditions tested. That provides a larger cushion, but it can also mean forgoing experiences, gifts or comforts you could otherwise afford. MRA uses a 90%–95% success target to explore that balance: a budget that works across most simulated futures, with room to enjoy your money. The percentage is a guide under the model’s assumptions. Even 100% success means only that the plan worked in all 100 paths tested—it cannot guarantee what will happen in real life. The intention is to review and adapt your plan as retirement unfolds. Look at when shortfalls appear, how large they are, and what changes you could realistically make. Results with guardrails already include the spending adjustments being tested, so remaining shortfalls could require further changes beyond those adjustments. Your own comfort matters. If your spending is difficult to reduce, or leaving a larger inheritance is important to you, you may prefer a larger cushion. A high success rate is an opportunity to consider spending more, never an instruction to do so.

Which expenses can change?

Subscribers can use the optional % Discretionary field on an EXPENSE to specify the portion that guardrails may adjust. The essential remainder is protected. Blank or 100% means fully discretionary; 0% means fully essential.

Example: a $100 expense with 30% discretionary contains $70 essential and $30 adjustable. A 30% guardrail changes the adjustable $30 by $9, giving a total of $91 after a bad year or $109 after a good year.

Both portions continue to follow normal inflation and scheduled changes. Each adjustment uses that year's original planned amount; it does not carry forward or compound. Guardrails affect the simulated expenses, without changing your expense entries or your regular scenario.

Comparing spending rules

The comparison table shows success rates and medians for lifetime spending, lifetime taxes, liquid legacy, spending plus legacy, and amounts passing to the estate. Estate totals combine both spouses' estates where applicable. Spending change compares median lifetime spending with the original spending rule.

Lifetime totals are calculated within each completed simulation before taking the median. Likewise, spending and legacy are added within each simulation first: the median of their sum can differ from the sum of their separate medians. The dollar amounts follow your choice of today's or future dollars.

The table can appear even when only the original spending rule was tested. Older saved simulations remain available, but do not show this comparison if they lack the stored lifetime medians.