You may be wondering why your plan score is high, and your Monte Carlo is so different. Understanding the calculations can help you make adjustments to your plan.

Optimistic and Pessimistic Assumptions

Optimistic and pessimistic plan scenarios model the absolute best case and worst case, respectively. Each scenario assumes the most extreme scenario will occur every year between now and your longevity age.

Monte Carlo Simulations

Monte Carlo simulates the average of the optimistic and pessimistic rates -- it runs 1,000 plans using variable inputs, using your optimistic and pessimistic assumptions as of the max and min for the calculation. The chart shows the optimistic result (green line), the pessimistic result (red line), and various percentile markers from the Monte Carlo analysis (blue line and shading). It may be that when you model your plan with average values, rather than the best case or worst case, the likelihood of running out of savings is different.

Test Scenarios to Learn More

Consider adjusting your optimistic and pessimistic assumptions and experiment with reducing expenses or saving more to see how the insights change. You may choose to make adjustments to your plan based on the additional information.

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