FAQ: How Can I Best Walk Through a "What If" Scenario Where I Adjust the Equity Return Assumptions?

Use Success Rate Analysis

The success rate analysis evaluates your retirement plan's ability to withstand various economic conditions. Instead of modelling a single market downturn (e.g., a 30% drop in equities), it:

  • Tests your plan against over 100 years of actual market data, including severe recessions and depressions.
  • Accounts for investment return fluctuations and inflation changes simultaneously.
  • Provides a statistically backed probability of your retirement plan’s success.

Optional: Model a Specific Investment Shock

If you want to assess the impact of a single investment loss, follow these steps:

  1. Identify the account and asset: Determine whether it's in a non-registered account, RRSP, or another investment vehicle.
  2. Apply a negative return: If your portfolio has a mix of assets (e.g., stocks and bonds), a downturn won’t affect all investments equally.
  3. Consider special cases: If you're holding Restricted Stock Units (RSUs) due to employer matching, assess the risk of a drop in their value.