Here is Another Way to Look at Fail Rates

Once you let a simulator vary longevity by actuarial-type tables additional ways to view retirement fail rates become available.  Here in this post is one more way.

For example, let a simulator, given some overly simplistic and generic assumptions[1], blow out some random versions of the future  (say 10k of them) based on what little it knows, and you can get a sense of how fail rates might change with longevity expectations.  I hadn't thought of this particular one before but I've added it to the repertoire of charts I'll keep an eye on.  While personally I usually plan for the worst (worst? really?) case of 95 or 105, reality tells me that earlier ages will make more sense when push comes to shove, if you will.

This effort here, fwiw, is another way of helping me not obsess about future-risk so I can play a little harder today...rather than live like a monk fearing an uncertain future.  My SO frets that I overdo this stuff but little does she know that she will benefit if I can spend more today due to my ocd over-analysis.

Left axis - fail rate for given longevity expectation
Right axis - freq distribution of terminal age in simulation. Matches SS tables
Points - the change in fail rate expectation for increases in longevity expectation












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[1] age 60, $1M, 4% constant spend, 60/40, some taxes and fees, no outside income, etc. etc.