Monte Carlo Retirement Calculator

Traditional retirement calculators assume a fixed return every year — say 7%. But markets don't work that way. Some years you earn 30%, other years you lose 20%. The sequence of those returns matters enormously, especially in early retirement.

A Monte Carlo simulation runs your retirement plan through 1,000 different scenarios, each with a different random sequence of returns and inflation rates drawn from a normal distribution. The result: a probability that your money lasts, not just a single yes/no answer.

Named after the famous casino city, Monte Carlo methods use randomness to model uncertain outcomes. They're used in finance, physics, engineering, and anywhere uncertainty matters.

Each year you delay Social Security past 62, your benefit increases. From 62 to 67 (full retirement age), you gain about 6-7% per year. From 67 to 70, you gain a guaranteed 8% per year through delayed retirement credits.

For high earners, delaying to 70 is often optimal: you have other assets to bridge the gap, you're likely to live longer (actuarially), and the 8%/year guaranteed return is hard to beat risk-free. But if you have health concerns or a shorter expected lifespan, claiming earlier may make sense.

Income-Related Monthly Adjustment Amounts (IRMAA) are surcharges on Medicare Part B and Part D premiums for high earners. If your modified adjusted gross income exceeds $103,000 (single) or $206,000 (married filing jointly), you'll pay more — sometimes significantly more.

IRMAA uses income from 2 years prior, so RMDs starting at 73 or large IRA withdrawals in your 60s can trigger surcharges at 65. Strategic Roth conversions in your low-income years between retirement and RMDs can reduce IRMAA exposure.

If you retire before Social Security and RMDs kick in, you may have several years with very low taxable income. This is a golden opportunity to convert traditional IRA/401k balances to Roth at low (or zero) tax rates.

This calculator detects this window automatically. Converting during this period reduces future RMDs, lowers IRMAA exposure, and shifts money into a tax-free-growth account. The converted amounts become accessible from the Roth after 5 years.

Buy: Build a large taxable brokerage portfolio of appreciating assets (index funds, stocks).

Borrow: Instead of selling assets (which triggers capital gains tax), take out securities-based loans against your portfolio. The loan proceeds are not taxable income. You pay interest, but avoid the 15-23.8% capital gains tax on appreciated shares.

Die: When the portfolio owner passes, heirs receive a stepped-up cost basis — the unrealized gains are never taxed. The loan is repaid from the estate, and heirs inherit the remainder tax-free.

How it works in practice: Brokerages like Schwab, Fidelity, and Interactive Brokers offer securities-based lending at rates typically 1-3% above SOFR. Typical loan-to-value ratios are 50-70% of the portfolio. If the portfolio drops significantly, a margin call may force partial liquidation.

Important: RMDs from traditional accounts are still required at 73+. BBD supplements the brokerage portion of spending only. This strategy primarily benefits those with $1M+ in taxable brokerage accounts.