FAQ: How is Success Rate Different Than a Monte Carlo Anaylsis?

We like using historical periods because it's easier to relate to. When you see the lower lines on the chart its easier to comprehend the "severity" of those events when its put into the context of the great depression or high inflation of the 1970s.

The challenge with monte carlo is that it is a statistical model, and as a result it can sometimes predict wild outliers like back to back great depressions or back to back great financial crisis (statistically possible events, but realistically unlikely).

Always, always take success rate analysis with a large "gain of salt". What this analysis is really meant to highlight is how much flexibility you need in retirement. If you can cut retirement spending and increase your success rate from 60% to 90% then you're in a good place. If you have no where to cut in retirement then a 60% success rate is a much bigger risk.