Monte Carlo simulation
Test your plan against thousands of possible market outcomes
A single projected retirement date creates false precision. Markets don't follow a straight line. Yield Clarity's Monte Carlo simulation runs 10,000 independent market paths to show you the range of possible outcomes — not just one.
What the simulation produces
Each simulated path generates monthly returns drawn from a distribution calibrated to your selected mean return and volatility. Inflation is also modelled stochastically. The simulation then summarises the aggregate results.
Probability of reaching FI
The proportion of simulated paths where your portfolio reaches the FI target by your chosen date.
Example: 49% by Nov 2034
Likely FI window
The date range within which the middle 50% of successful paths reach financial independence.
Example: January 2032 – July 2038
Confidence bands
The 50% and 80% outcome ranges show how wide the spread of portfolio values could be over time.
Example: Visible as shaded bands on the fan chart
Retirement sustainability
After reaching FI, each path continues to model withdrawals and returns through your retirement horizon.
Example: 99% sustained over 15 years
Sequence-of-returns risk
Early retirement years are vulnerable to poor returns. The simulation compares normal conditions versus poor early-year scenarios.
Example: Depletion probability changes from 1% to 8%
Fan chart visualisation
A visual representation of the outcome range showing the median path and confidence bands over time.
Example: Indigo-shaded probability range
Expected path versus Monte Carlo
The expected-path forecast uses your selected annual return rate, applied consistently each month, to produce a single projected FI date. It's useful for understanding how your inputs affect the outcome.
The Monte Carlo simulation instead draws each month's return from a probability distribution, creating thousands of different possible futures. Some paths perform well; others encounter poor early returns. The aggregate result tells you how likely each outcome is.
Together, the expected path gives you a clear baseline and the Monte Carlo gives you the range of uncertainty around it.
What probability means
A 49% probability of reaching FI by Nov 2034 means that 49% of the 10,000 simulated paths reached the target by that date.
This is not a guarantee. It is a statistical summary of simulated outcomes based on the assumptions you've chosen. Actual markets may behave differently from the model's distribution.
The model assumes returns are drawn from a log-normal distribution, which may not capture all real-world dynamics such as fat tails or regime changes.
Run your own simulation
See the probability of reaching FI based on your actual portfolio.
Run a simulation