**Question:**

I have done extensive research on the Internet regarding using Monte Carlo simulators for retirement planning. From what I have read, it is more important to withdraw a fixed percentage (i.e 4%) of your total portfolio each year rather than a dollar amount. For example a $1 million porfolio you would withdraw 4% or $40,000 per year and let the rest grow.

My question is does your Monte Carlo simulation allow you to enter withdrawls amounts as a percentage of the portfolio as opposed to just a dollar amount. Some programs will event tell you how much you can withdraw at a given level of probability.

In other words, you have a 95% probability of not running out of money for xxx years if you withdraw xxx amount per year. How does your program deal with these issues.

**Answer:**

With RetireWare, you build a plan by choosing a retirement income objective, and the income need is met using Government and company pensions, other income, and investment assets, each with their withdrawal rules and tax treatment. You run your plan on a deterministic basis (that is, assuming no variations in expected rates of return).

Withdrawals from invested assets depend on what you need to close the gap between the retirement income objective and income payable each particular year. This amount varies as some are indexed, others come in payment only from a certain age and some cease being paid at a particular point in the future (for example, if you work on a part-time basis for a few years after retirement).

The retirement plan that you create with all this level of detail is "stressed-test" using a Monte Carlo simulation, where the expected rate of return for each asset class varies randomly in accordance with its volatility. Monte Carlo is integrated with the actual plan and is not merely a flat withdrawal percentage each year. We have seen articles showing a safe withdrawal rate using Monte Carlo simulation as an analysis tool, but they usually used a simplified model. Our model takes into account various types of income and various types of investment accounts (non-registered, RRSP, locked-in assets, etc., each with their own withdrawal constraints).

You can try different retirement income objectives and see the probability of success for each. Then you can decide the income level you feel most comfortable with.

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