Related to this calculator, check out our Retirement Withdrawal Calculator and Portfolio Allocation Calculator.
This calculator generates simulation runs for each year of data in our historical dataset (1928 - present) based on what you enter above. It is useful for seeing how much your nest egg may be worth in the future based on the portfolio allocation selected, contributions, and how much you have currently saved.
Field Summary:
Some insights into the results this tool unearths:
How the simulations work:
This calculator is NOT a Monte-Carlo simulator in that it does not generate any fake or random data. Instead, this calculator uses historical data and backtests against it. Essentially it replays what happened in each of the years in the dataset given the inputs and then summarizes the results.
For a 20 year savings period, this calculator will run a simulation from 1928 to 1948, then it will run a simulation from 1929 to 1949, then from 1930 to 1950, and so on. In simulations that go beyond the present year, it will wrap back to 1928 and count up from there. In this sense, the effect of the great depression is factored in for early and late starting years.
Each individual simulation computes returns by stepping through the years (eg 1928, 1929, ... 1948) and performs the following each year:
Notes on Inflation:
The numbers this calculator outputs are not inflation adjusted, they are nominal values. The numbers don't translate to actual purchasing power in the starting year of the simulation.
Historical Data Used:
The data this calculator uses can be found here.
Past Performance Does Not Indicate Future Results:
Again, this calculator does backtesting. Past performance does not guarantee nor indicate future results. These results are based on simulated or hypothetical performance results that have certain inherent limitations. Unlike the results shown in an actual performance record, these results do not represent actual trading. Also, because these trades have not actually been executed, these results may have under-or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated or hypothetical trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profits or losses similar to these being shown.
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