We don't use a traditional probability of success - we use a fundeness test, much like a pension plan. We take the present value of lifetime withdrawals using a discount rate of 4%, and compare that to starting financial asset values. Constrained would be a fundedness ratio of 110% or less in our model. This would equate to approximately a monte carlo analysis result of a probability of success at about 75% - but that is highly dependent on the parameters of the monte carlo as each uses different assumptions and models different factors.
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Dana is my favorite financial guru.😀
What Probability of Success does a Constrained retirement plan fall into.
depends...do you have no debts (is your house and card paid for?) and do you get a decent SS check. If you have those two things, it "can" work.
We don't use a traditional probability of success - we use a fundeness test, much like a pension plan. We take the present value of lifetime withdrawals using a discount rate of 4%, and compare that to starting financial asset values. Constrained would be a fundedness ratio of 110% or less in our model. This would equate to approximately a monte carlo analysis result of a probability of success at about 75% - but that is highly dependent on the parameters of the monte carlo as each uses different assumptions and models different factors.
@@Sensiblemoney Thanks,