Why the same average return can hide two very different retirements
Two portfolios can average the same 7% a year and end up nowhere near each other — one that drops 20% in year one and recovers is far worse for a retiree withdrawing money than one that starts flat and rallies later, even with an identical long-run average. This is sequence-of-returns risk, and it's invisible to a single fixed-rate projection. Compare against a fixed-rate view with the Retirement Withdrawal Calculator.
Frequently asked questions
Why simulate instead of using one fixed return?
A single average return hides sequence-of-returns risk — a few bad years early in retirement can deplete savings even if the long-run average looks fine. Running thousands of randomized paths shows how often that actually happens, not just the average outcome.
What does "success" mean here?
A trial "succeeds" if the balance never hits zero before your retirement horizon ends. A 90% success rate means 9 out of 10 simulated market paths kept paying you for the full period — not a guarantee, but a much fuller picture than one straight-line projection.
What volatility number should I use?
Historically, a diversified US stock portfolio has annual volatility (standard deviation) around 15-18%; a 60/40 stock/bond mix is closer to 10-12%. Higher volatility widens the range of outcomes in both directions.
Last updated: June 2026