The Monte Carlo simulator runs 2,000 simulations of your retirement plan, each using a different randomly generated sequence of investment returns. The result is a range of possible outcomes - not a single prediction, but a picture of how your plan holds up across many possible futures.

The confidence band on the chart shows the spread of outcomes across all simulations. The shaded band spans the 20th to 80th percentile - the middle 60% of simulations - with the median line running through the center:

• 80th percentile (top of the band) - only 20% of simulations did better than this. A strong-market outcome.
• 50th percentile (median) - half of simulations did better, half did worse. The middle-of-the-road result, and the one shown in the year-by-year projection table.
• 20th percentile (bottom of the band) - 80% of simulations did better. A poor-market outcome.

The success rate shown on the chart is the percentage of simulations in which your portfolio did not run out of money before the end of the plan. A success rate of 85% means that in 850 out of 1,000 simulations your money lasted - and in 150 it ran out at some point.

What success rate should I aim for? There is no single right answer, but a common rule of thumb is 80-90%. Targeting 100% often requires an unrealistically conservative plan. A success rate of 70-80% may be acceptable if you have flexibility to reduce spending or other fallback options. The right target depends on your personal risk tolerance and how much flexibility you have.

The median line is a useful reference point, but do not ignore the bottom of the band. Retirees who experience poor returns early in retirement - known as sequence-of-returns risk - can end up near the 20th percentile even if markets eventually recover. A plan that looks comfortable at the median but weak at the 20th percentile may deserve more attention.

The bar overlay

The chart can add an optional year-by-year bar series (available on both the Dashboard's Monte Carlo chart and the What-If Explorer). Use the toggle above the chart to switch between the two views, or click the active one again to hide the bars entirely. When shown, the bars read against the left axis (a percentage), while the median line and confidence band keep the right axis (portfolio balance):

• Withdrawal Rate - the percentage of your portfolio withdrawn each year to cover expenses. Handy for spotting the heavy-lifting years - often the pre-Social-Security bridge or years with a large one-time expense - and for comparing against the classic 4% rule of thumb.
• Risk of Ruin - the percentage of simulations in which your portfolio has run out of money by that age. It starts at zero and climbs over time; the final-year value is the mirror image of your success rate (a 90% success rate ends near 10% risk of ruin). Seeing when the risk starts to rise tells you which stretch of the plan is most fragile.

The steady-return reference line

Both the Dashboard's Monte Carlo chart and the What-If Explorer offer an optional Steady return overlay, toggled from the legend beneath the chart (off by default). It draws a dashed reference line showing what your portfolio would do under a perfectly steady return - your expected average, every year, with no ups and downs - laid directly over the realistic median.

The gap between the two lines is the point. The steady line almost always sits above the median, and the distance between them is volatility drag: the amount a bumpy real-world return sequence costs you compared to an idealized smooth one. Hover any year to see both values and the drag between them. It is a quick, visual way to see why a straight-line projection tends to look better than a realistic one. (In Linear mode the whole chart is already the steady line, so the overlay is hidden there.)

Linear mode

The method toggle above the chart also includes a Linear option that replaces the simulation entirely with a single deterministic straight-line projection - your expected return applied every year with no variance. Because there is no distribution, the success rate, risk of ruin, and the percentile outcome tiles and band do not apply and are hidden, and the outcome tile is relabeled "Projected Outcome". See the return-method article for how Linear compares to the Monte Carlo and Historical methods.

Simulation results are projections, not guarantees. They are a tool for stress-testing your plan across many possible futures so you can make informed decisions, not a precise forecast of what will happen.