Portfolio & Withdrawal Details
Return Assumptions
UK 60/40 portfolio: ~6% return, ~10% volatility. 100% equities: ~8% return, ~17% volatility.
Probability of Success
Ending Balance Scenarios
Portfolio Balance Over Time
Shaded bands show 10th-90th percentile range. Centre line = median.
Frequently Asked Questions
What is a Monte Carlo simulation for retirement planning?
A Monte Carlo simulation runs thousands of randomised scenarios using your input assumptions (return, volatility, withdrawals) to model a range of possible retirement outcomes. It shows the probability that your portfolio lasts through retirement rather than giving a single deterministic answer.
What success probability should I aim for in retirement?
Most financial planners suggest targeting 85–95% success probability. A 90% success rate means 90 out of 100 simulated retirements succeeded. Some UK planners argue 80% is acceptable given flexibility to reduce spending in poor markets.
How does volatility affect retirement portfolio success?
Higher volatility increases the risk of large early losses (sequence-of-returns risk). A portfolio that loses 40% in the first two years of retirement is far more damaged than the same loss in year 20. Reducing equity allocation in early retirement reduces this risk.
What return should I assume for a UK equity portfolio?
UK equities have returned approximately 5–6% real per year over the long term. A conservative assumption for a 60/40 portfolio is 5–6% nominal. This calculator uses nominal returns, so remember to subtract 2–3% for real purchasing power.
How is the Monte Carlo normal distribution approximated?
This calculator uses the Box-Muller transform to generate normally distributed random returns from uniform random numbers. Each simulation generates a sequence of annual returns with the specified mean and standard deviation, then applies inflation-adjusted withdrawals to track portfolio balance year by year.