How to Stress-Test Long-Term Retirement Plans

RELATED CONTENT

Calculate Retirement Withdrawals With Monte Carlo

By playing with the various risk/return inputs, Monte Carlo analysis can help you estimate how long a client's nest egg might last.

Uncalculated Factors in Retirement-Planning Simulations

Monte Carlo simulations may be useful, but they offer only imperfect estimates of investment risk. Other factors—political, economic, and military, for example—aren't necessarily going to be as dormant as the simulations expect them to be.

Using Projections in Financial Planning

Consider carefully how you use projections in building your clients' financial plans. Complicated analytics may seem beneficial, but there is a lot of wisdom in simple metrics like "target rate of return."

5 Warning Signs That a Retirement Portfolio Won't Last

Price-to-earnings ratios are one way to gauge whether a distribution portfolio has staying power. Withdrawal rate as a percentage of portfolio value or compared with annuity payments are two more. Following are five indicators that will give you eight to 30 years' advance notice of when a portfolio will be depleted.