What a 90% Success Rate Really Means
Run a retirement plan through a Monte Carlo simulation and you get back a number: a success rate, sometimes called a Monte Carlo score. Maybe it says 90%. It looks reassuring, but it's widely misread — and understanding what it actually measures changes how you should react to it.
What the score actually is
A Monte Carlo simulation doesn't assume one smooth average return. It runs your plan through hundreds or thousands of different possible sequences of market returns — good years and bad years in many different orders — and checks, in each one, whether your money lasted. The success rate is simply the share of those runs where it did. A 90% score means your plan survived in 900 of 1,000 simulated histories and fell short in 100.
That's a very different statement from "you have a 90% chance of being fine no matter what." It's a measure of how robust your plan is across many possible futures — not a guarantee, and not a year-by-year probability.
Why a single average return lies to you
While you're saving, the order of returns barely matters — a bad year early gets swamped by decades of contributions and growth. Once you're retired and withdrawing, the order suddenly matters a lot. Two retirees can experience the exact same average return over thirty years and end up in completely different places, purely because of when the bad years showed up.
Sequence-of-returns risk, in one example
Imagine two people retire with the same balance and the same long-run average return. One hits a steep market drop in their first few years; the other gets those same bad years near the end. The first retiree is selling investments to cover spending while prices are down, locking in losses early — so there's less left to recover when the market rebounds. The second retiree's portfolio had years to grow before the rough patch arrived. Same average, very different outcomes. That gap is sequence-of-returns risk, and it's the single biggest reason a plan that looks fine "on average" can still fail.
This is exactly what a Monte Carlo simulation captures and a simple average-return projection cannot: by shuffling the order of returns thousands of times, it exposes how vulnerable your plan is to a bad start.
So what score should you want?
There's no magic threshold, but many planners look at the 80–95% range. Counterintuitively, a 99–100% score isn't necessarily the goal — it often means you're spending less than you safely could and leaving a large unspent balance behind. A lower score means more risk of running short. Where you aim depends heavily on your flexibility: someone who can trim spending in a bad year can tolerate a lower score than someone whose expenses are fixed.
That flexibility is also the most powerful lever you have. Adjusting spending when markets disappoint, keeping a cash buffer so you're not forced to sell at the bottom, and staying open to part-time income all reduce sequence risk far more than chasing a slightly higher number on a chart. These are considerations to weigh, not instructions — your situation decides which apply.
See it on your own numbers
The clearest way to understand your own sequence risk is to watch it move. The free Monte Carlo retirement calculator runs your plan through a thousand simulated market histories and shows your success rate, so you can see how changes to spending, retirement age, or savings shift the odds. If you want this interpreted for your specific circumstances, a fee-only planner can help — there are directories on our Connect with a professional page.