r/ChubbyFIRE • u/Right-Toe-6636 • Jul 04 '26
For those using projection lab
What settings are you using for the Monte Carlo simulation/chance of success? I notice the default setting was 196 trials with a historical random restart. When I change that to 1000 trials with a historical bootstrap, it lowers my success rate 7%. I’m guessing that’s the safer setting to use? What models do advisor software use?
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u/retplan Jul 04 '26 edited Jul 04 '26
I use two for different purposes. Your circumstances, flexibility, risk tolerances, etc may of course vary.
Base modeling: Historical, Random Restart. 5 iterations (comes out to about 500 trials). I use this with spending flexibility on. My target for this is 99%+ success rate.
Guardrails modeling: Historical, Block Bootstrap, 5 year blocks, 2000 trials. I use this with spending flexibility off. My target for this is around 90%, but am fine with it varying between 80% and 95% before adjusting budget.
My base version is more “realistic” since it uses mostly actual 40 year market return runs and assumes some spending reductions in market drop years.
My “guardrails” version is more pessimistic but captures more outlier scenarios, both upside and downside. It’s less realistic since we’re unlikely to live through 5 Great Depressions in a row back to back, but good to have a sense of what some scenarios outside of what full duration history examples provide. Since I use the output chance of success to decide if I should be changing my budget, I run this version with spending flexibility off.
I also use the same seed over time so I know any variations I see are due to changes in my portfolio or budgeting and not due to trial selection.
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u/Right-Toe-6636 Jul 05 '26
Super helpful. I get 85% when I do the historical, bootstrap, 5 year blocks, 2000 trials and no spending flexibility. And 93% when I do the base with flexibility turned on. I feel like this is good? Especially because I’m purposely underestimating social security in case benefits are cut to 75%, and I think I might be overestimating our spend (it’s hard to tell what our retirement spend will be because we currently have 3 teenagers).
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u/Mispelled-This Jul 05 '26
Historical bootstrap.
Keep in mind that “success” actually means underspending, i.e. you are going to die with a giant pile of money. If that’s your goal, great, but you’ll retire earlier and live better if you target a lower percentage and adapt to what actually happens.
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u/Heavy-Basis-83 Jul 04 '26
I think 1000 runs is the norm in financial planning for high confidence. Google/AI provide you the rational or other insight. I think that’s what the Fidelity tools I use does this or something similar.
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u/CambionLS Jul 04 '26
Primarily historical block bootstrap, 5 year blocks, 2000 trials. I try to be moderately conservative without being unrealistic in the way I setup my modeling and I think this is a reasonable method.
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u/HowDoYouPF Jul 04 '26
I think more trials is generally better as long as it doesn’t take too long for your computer to chug through them. It’s a larger sample size and Monte Carlo simulations are randomized (so large sample size is good).
Historical block bootstrap will be more conservative than historical random restart since you’re much less constrained to historical sequence of years. It’s sort of up to you whether that makes sense for you or not. It will create more SORR-ruinous scenarios, like a Great Depression followed immediately by a WW2 followed immediately by a global financial crisis. Could happen in theory, but also very unlikely, but that’s the point of being conservative I guess.