Page 78 - Ready Set Retire

Stephen J. Kelley

Figure 11: Monte Carlo run with 1000 simulations

This couple starts with about $1million, and is looking for it to
produce around $100,000 a year. Obviously, this is way more
than we would recommend, but it makes the point. Note how
the results range from running out of money within 13 years
to having around $7 million at the end of life. These results
hardly inspire confidence in the model.
It makes much more sense to find the round peg than it does
to use a statistically mismatched model to try to jury-rig the
square peg. In the former, you have an approach designed for
the issue at hand: predictable income you can’t outlive. In the
latter, you have a situation that inevitably leads to sleepless
nights and often to financial disaster.

68