The Hidden Flaw in Monte Carlo Analysis That's Ruining Retirement Plans

Ready For Retirement

Many retirees focus on achieving a high Monte Carlo “probability of success” in retirement—but is chasing a 99% success rate always the best move? In this episode, James highlights a real-life story of a man forced to delay retirement after a divorce dropped his probability of success from 99% to 70%. James explores why this single number shouldn't drive such massive decisions. He explains how context—like income sources, spending flexibility, and home equity—matters more than a static success rate. You’ll learn why 100% isn’t always ideal, and how to build a retirement plan that supports a meaningful life, not just a perfect score.
Questions answered?
1. Should I delay retirement if my Monte Carlo probability of success drops?

2. Is a 100% probability of success the best goal for my retirement plan?

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Timestamps:
0:00 - An encounter at the gym
2:37 - What is Monte Carlo analysis?
4:18 - Consider severity of failure
6:19 - Consider other assets, like property
7:35 - Is a 100% probability score really success?
10:55 - Monitor and course correct
14:13 - Margin
15:07 - No universal number
16:13 - Assumptions about spending
18:27 - Retirement spending smile
20:57 - Context matters

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Chapters

1. Introduction & Gym Revelation (00:00:00)

2. Defining Monte Carlo Probability (00:02:23)

3. Why 100% Success Isn't Necessary (00:06:04)

4. Interpreting Probability of Success (00:10:14)

5. The Reality of Retirement Spending (00:15:12)

6. Context Matters for Decision Making (00:20:20)

7. Key Takeaways & Conclusion (00:23:20)