Monte Carlo Retirement Calculator

Why average returns lie

Most retirement calculators ask for one number: your expected annual return. They assume a smooth 6 % or 7 % every year and report a single nest-egg figure. Real markets don't work that way. Two retirees with the same 30-year average can end up with wildly different outcomes depending on the order of their returns — a problem known as sequence-of-returns risk.

A Monte Carlo simulation replaces the single-average assumption with thousands of plausible return paths. You see not one outcome but a distribution — the 10th, 50th, and 90th percentiles — and a probability that your money lasts the full horizon. That is the right shape of information for a 30+ year retirement decision.

RetireCrunch's Monte Carlo engine runs 1,000 sequences per calculation, applies inflation each year, and supports US 401(k)/IRA/Social Security as well as the Swiss three-pillar system. The same method is what pension funds and licensed advisors use behind the scenes — we just expose it for free in your browser.

How the calculator works

1. Enter your current savings, annual contributions, retirement age, and target annual spend.
2. Pick a portfolio profile (Conservative / Balanced / Aggressive). Returns are sampled from historical-style distributions for each.
3. We run 1,000 randomized return sequences across your retirement horizon, applying inflation, withdrawals, and any modelled pensions / Social Security.
4. You see a success probability plus a fan chart showing P10 / P50 / P90 wealth trajectories — so you know not just whether your plan works, but how much margin you have.

Monte Carlo retirement FAQ

What is a Monte Carlo retirement simulation?

A Monte Carlo retirement simulation runs your plan through thousands of randomized return sequences instead of assuming a single average return. It captures the realistic year-by-year variability of stock and bond markets — including crashes, recessions, and inflation spikes — and reports the probability that your savings survive the full retirement window.

Why is Monte Carlo better than a single-average-return calculator?

Simple calculators that assume a flat 6 % or 7 % return mask the single biggest risk in early retirement: sequence-of-returns risk. Two retirees with the same average return over 30 years can have wildly different outcomes if one experiences a major drawdown in their first decade of withdrawals. A Monte Carlo simulation surfaces this risk by reporting outcomes at the 10th, 50th, and 90th percentiles.

How many simulations does RetireCrunch run?

1,000 randomized return sequences per calculation. Each sequence applies a different ordering of historical-style annual returns to your plan, then we count how many sequences leave you with money at the end of the horizon.

What return assumptions do you use?

Returns are sampled from historical-style distributions per portfolio profile (Conservative, Balanced, Aggressive). Inflation is applied each year. You can override the expected return and withdrawal rate on the FIRE Calculator if you want to stress-test specific assumptions.

How is this different from the 4 % rule?

The 4 % rule is a single deterministic guideline based on the Trinity Study. Monte Carlo simulation is a method that tests your actual plan — your savings, expenses, pensions, retirement age — under thousands of return scenarios. It also lets you pick a non-4 % withdrawal rate and see the success rate for that choice.

Is this financial advice?

No. RetireCrunch is a free educational tool. The results are illustrative projections based on simplified assumptions, not regulated financial advice under US or Swiss law. Consult a licensed financial advisor for decisions specific to your situation.