Monte Carlo Simulations: Is Your "Probability of Success" Trustworthy?
Big Picture Retirement®
Devin Carroll
4.7 • 546 Ratings
🗓️ 30 September 2024
⏱️ 38 minutes
🧾️ Download transcript
Summary
In this episode, we take a closer look at Monte Carlo simulations—a tool used in retirement planning to estimate your chances of success. But are those percentages really reliable? Can an 85% or 90% success rate give you confidence in your retirement plan? We'll explain how these simulations work, how different assumptions can lead to very different results, and why you shouldn't just rely on past returns.
If you're thinking, "I love the Big Picture Retirement podcast!" please consider rating and reviewing this show! This helps us support more people -- just like you -- move toward a confident retirement. Just scroll down to the "ratings and reviews" section, tap to rate with five stars, and select "Write a Review." Then be sure to let us know what you loved most about the episode!
Also, if you haven't done so already, follow the podcast. We add new content every week, and if you're not following, you'll likely miss out. Follow now!
Don't miss the Big Picture Retirement Planning Cheat Sheet. We've distilled the essential brackets, thresholds, and rules of retirement into an easy-to-digest, three-page summary. https://www.carrolladvisory.com/pl/2148282517
Want to ask Devin or John your question? Just visit https://www.bigpictureretirement.com/ and click on the "Ask A Question" menu selection.
Although this show does not provide specific tax, legal, or financial advice, you can engage Devin or John through their individual firms.
Contact Devin's team at https://carrolladvisory.co/podcast1
Contact John's team at https://www.rossandshoalmire.com/
Transcript
Click on a timestamp to play from that location
| 0:00.0 | The Big Picture Retirement Show does not provide tax, legal, or financial advice. |
| 0:04.3 | Listeners are encouraged to seek out their own advisors in these areas. |
| 0:10.6 | Hey, everyone, welcome to the Big Picture Retirement Show. |
| 0:13.7 | I'm your host, Devin. |
| 0:14.6 | Today, John's on vacation. |
| 0:16.3 | Guess what? |
| 0:16.8 | We have Alexander back in the studio with us. |
| 0:19.6 | Hi, Alexander. |
| 0:20.6 | Hey, Devin. |
| 0:21.0 | Thanks for having me on. Well, of course. With a subject like we have today, how could I not have you on? I don't know. I know you're chomping at the bits for this one. Yeah, it's an interesting subject. It is. So we get to look at a lot of plans. We see a lot of plans that come in. A lot of people that hire us for planning will often send us plans that they've had completed at other shops. Maybe it was something that they did online through one of the online providers that give these projections. And one of the things that they always get pretty focused on is their |
| 0:56.8 | probability of success, that that idea of, hey, guys, look, now this is saying I have a 90% |
| 1:04.9 | probability of success, but I want you to double check that for me. And, you know, as we talk to so many of these people, we start figuring out that there is a lot of focus being put on that probability of success. |
| 1:19.6 | Well, we certainly have a lot of people that come to us. |
| 1:22.0 | And their description of the financial planning that they've had done before is, well, my guy kind of puts |
| 1:28.8 | everything into a Monte Carlo and tells me the probability of success. Yeah. And that's true. |
| 1:34.8 | You know, I've talked to several people who have said things like, well, you know, I asked my |
| 1:39.7 | advisor about filing for Social Security at 64 instead of for retirement age. |
| 1:46.1 | And he said that I shouldn't because it brought my probability of success down |
| 1:50.5 | about two percentage points. |
| 1:53.1 | And every time I hear something like that, I just think, |
| 1:55.6 | that is the dumbest thing I've ever heard. |
| 1:57.6 | And it irritates me that so many people now are using these little meters that |
... |
Please login to see the full transcript.
Disclaimer: The podcast and artwork embedded on this page are from Devin Carroll, and are the property of its owner and not affiliated with or endorsed by Tapesearch.
Generated transcripts are the property of Devin Carroll and are distributed freely under the Fair Use doctrine. Transcripts generated by Tapesearch are not guaranteed to be accurate.
Copyright © Tapesearch 2026.