How is Goal Achievability Calculated?

On the Goal Projector screens, you can help your clients determine how achievable their financial goals are, whether that be for Retirement Income or Wealth Accumulation.

Within each of the Goal Projector screens, you will input some information about the client's desired annual retirement income or wealth accumulation goal, along with the client's annual investment contribution, time horizon, and for the retirement goal, pension and income from other sources in retirement.

Example: Retirement Income projection
Example: Wealth Accumulation projection

From here, each portfolio option is run through 10,000 Monte Carlo simulations, which project how the client's wealth is expected to change over time. For each simulation we generate a sequence of returns. We assume returns are normally distributed and occur on an annual basis, where:


  • Within the Wealth Accumulation goal, the simulations project how much money the client is likely to have at their expected withdrawal date, given the client's investment amount, annual contributions, and time horizon.
    • For the wealth accumulation goal there is no inflation adjustment, all values are in nominal dollars.

  • Within the Retirement Income goal, we project the wealth at the retirement date as per the wealth accumulation goal. Then when you retire, we assume that you continue to stay invested in the same investment option and withdraw a constant amount each year (but adjusting upwards for inflation). For each simulation, we calculate the highest possible withdrawal rate such that you don’t run out of money before your planning horizon. For a household, the contributions stop and the withdrawal phase begins at the earlier of the two retirement dates. Withdrawals continue until the younger of the two clients reaches the planning horizon.
    • For the Retirement Income goal there is inflation adjustment. Specifically the investment contributions towards your retirement goal are expected to grow with inflation, and the retirement income amounts are the real value in today's dollars. This makes it easier for clients to understand their potential retirement income compared with their spending today.

You can see the 15th-85th percentiles of the simulations either by selecting the dropdown to the top left of the chart or by switching to the table view (click the three horizontal bars on the top-right corner of the chart).

Example: Retirement Income Monte Carlo simulation results
Example: Wealth Accumulation Monte Carlo simulation results

It is important to note that the projections are designed for illustrative purposes only, and do not represent a full financial plan.

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