GLOSSARY · RETIREMENT WITHDRAWALS & EARLY ACCESS
Monte Carlo simulation
Testing a retirement plan against thousands of randomly generated market paths instead of one average return, and reporting the share of paths in which the money lasts. The result depends on the return and volatility assumptions fed in; it is a stress test, not a forecast.
Also called: monte carlo retirement, probability of success
COMPUTE IT WITH YOUR NUMBERS
LEARN IT PROPERLY
CHAPTER · RETIREMENT PLANNING FUNDAMENTALS · FOUNDATIONSTurning Savings into IncomeCHAPTER · FIRE: FINANCIAL INDEPENDENCE RETIRE EARLY · DEEP DIVELife After FI: Making the Money LastRELATED TERMS
SOURCES
- Monte Carlo Methods in Financial Engineering. Paul Glasserman, Springer, 2003.