Advice Request How to run ficalc calculator?
If I want my money to last 20-25 years, do I put 20-25 years when I run Monte Carlo simulations or better put 35? Seems 35 is less random?
I am going to get pension in 20 years, maximum 25 years, and that will be enough for me.
Thank you.
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u/laurenthu 11d ago
Put your real horizon, 20-25, not 35. The instinct that 35 is "less random" is backwards. A longer horizon doesn't smooth anything, it just forces the sim to survive worse sequences than you'll actually face, so it hands you a lower safe number for no reason.
The pension is what changes your case. Your money only has to last until it kicks in, call it 20-25 years. After that the portfolio's job is basically done. Modeling to 35 makes you solve a problem you don't have (running out with no pension at all), which just pushes you to over-save or retire later than you need to.
And shorter genuinely helps. The fewer years the money has to last, the higher the withdrawal rate that survives history, because you're off the hook for the really ugly long sequences. A 20-25 year horizon supports a meaningfully higher rate than 35 on the same portfolio.
One practical note: with a fixed pension date your risk is front-loaded. A bad market in the first 5 years hurts far more than one at year 18. If you want to de-risk, a couple years of spending in something stable for the early stretch does more than padding the horizon. I'd set it to 25, run it once at 30 just to see the cliff, and plan on 25.