1Economic Synopsis, No. 25. Federal Reserve of St. Louis, October 2021.
2Calculations by Nick Bunker, director of North American Economic Research at Indeed Hiring Lab, using IPUMS extract of CPS microdata.
3The 8th annual T.RowePrice Retirement Saving & Spending Survey was conducted by NMG Consulting on behalf of T.RowePrice and included a sample of 2,895 401(k) retirement plan participants and 1,136 retirees with a Rollover IRA or left-in-plan balance. The survey was fielded online from June 24 to July 22, 2022.
*The projections in this article were calculated using the Retirement Income Calculator. The calculator uses Monte Carlo analysis to generate 1,000 hypothetical scenarios based on inputs such as, but not limited to, performance of various asset classes, saving and spending assumptions, a client’s time horizon, life expectancy, income and expenses, and other variables. The Monte Carlo analysis provides ranges of potential future outcomes based on a probability model. The Monte Carlo simulation runs the user’s scenario 1,000 times, so, for example, if 600 of those runs are successful (i.e., all goals are funded and you have at least $1 of assets remaining at the end), then the probability of success would be 60%, and the probability of failure would be 40%. For purposes of this illustration, a moderate allocation (60% stocks, 40% bonds) was used, and these allocations are assumed to be rebalanced annually to remain consistent. Additionally, the investor is assumed female, single, and residing in Colorado with a date of birth of March 1, 1961. Ninety percent of the assets are in qualified retirement accounts. For details on this and other assumptions, please read ourMethodology and Assumptions (PDF).
The information provided in this tool is for general and educational purposes only and is not intended to provide legal, tax, or investment advice. The assumptions and methodology are not tailored to the needs of any specific investor. Results are intended as an aid, are not guaranteed, and should not be your only source of information when making financial decisions. Other T.RowePrice educational tools or advice services use different assumptions and methods and may yield different results.
IMPORTANT: The projections or other information generated by the Retirement Income Calculator regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. The simulations are based on assumptions. There can be no assurance that the projected or simulated results will be achieved or sustained. Actual results will vary with each use and over time, and such results may be better or worse than the simulated scenarios. Clients should be aware that the potential for loss (or gain) may be greater than demonstrated in the simulations.
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