Volatility_Demonstration

Portfolio Volatility
SUCCESS PROBABILITY
—%
Half of simulations maintain funding
Starting Annual Spending: $— (dynamically adjusted by guardrails)
How it’s calculated

After-cost compounding

We compound net of costs/withdrawals by year.
$$ PV_{t+1} \;=\; \big(PV_t - W_t\big)\,\times\,(1 + r_t) $$

Portfolio percentile curves

For each year we take the 10th / 50th / 90th percentile of all simulated paths:
$$ P_q(y) \;=\; \operatorname{Quantile}_q\big(\{\,PV^{(i)}_y\,\}_{i=1}^N\big) $$

Max drawdown

$$ \text{MDD} \;=\; \max_t \left(\frac{\operatorname{Peak}_t - PV_t}{\operatorname{Peak}_t}\right) $$

Guaranteed income COLA (real)

$$ \text{real\_COLA} \;=\; \text{nominal\_COLA} - \text{CPI} $$

Example with your last run (auto-filled):
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Retirement Portfolio Analysis

Guardrails Strategy: Tune Mode

Portfolio value over time
90th / 50th / 10th percentile

Portfolio Outcomes at Year 25

Scenario Probability Final Wealth Max Drawdown Avg Annual Return
Poor (p10) 90% chance of doing better $0 —% —%
Median (p50) 50% chance of doing better $0 —% —%
Good (p90) 10% chance of doing better $0 —% —%

Each line represents a different probability scenario based on 1000 simulations.

90th percentile is optimistic (~10% of runs do better), 50th is the median, 10th is cautious (~90% of runs do better).

Tip: re-run the calculator, then come back and hit Refresh.

How to Read These Results

  • The chart shows 3 possible paths for your portfolio.
  • Guardrails will adjust your spending to help avoid running out.
  • Even in the worst case (p10), guardrails prevented earlier depletion.
  • Max drawdown shows the largest decline from any peak.

Key Insights

  • —% success rate is below typical target of 80–90%.
  • Consider reducing initial spending or adjusting allocation.
  • High drawdowns indicate significant volatility risk.
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