How are Monte Carlo simulations run and where do the assumptions come from?

How Monte Carlo Works: Monte Carlo analysis works by generating multiple simulations on total returns for every investment in the retirement plan. The steps inside the program work as follows: a) Generate 1,000 random numbers (there are 1,000 simulations) for each asset class for every year in the plan based on that asset class’s standard deviation and correlation with every other asset class. [...]

Where do I view and change the default annual return assumptions used in the program?

To view and edit the default annual returns go to Global Settings > Asset Class Mapping. You can edit the annual returns used in the program for each asset class by clicking on the row you want to edit. You can also add a new asset class here, such as REITs or cryptocurrency, and assign it to investments or holdings. [...]

In the Cash Flow Distributions section the beginning investment balance next year does not equal the ending investment balance this year. Why not?

This is due to placing everything in today’s dollars. In order for all numbers in each year to add up, the beginning balance is also reduced by the inflation rate in that year. That is why the beginning balance does not equal the previous ending balance. It’s basically a quirk of math when placing everything in today’s dollar terms by stripping out inflation. If you turn off using ‘today’s [...]

Does the program estimate state income taxes?

Yes, the program will accurately calculate your state income tax rates based on the state you live in or will move to in the future. You can find state tax settings under Plan Settings>Taxes. src="https://cdn.livehelpnow.net/clients/21145/kb/stax4_023266ef-91b7-4958-982b-9b37b2fff961.png" id="1a2de0c5-b0dc-4717-b930-03c998e24148" alt="stax4" width="90%" height="auto" [...]

When does the program update new tax brackets and tax laws?

The program is updated at the end of every year with new federal tax brackets. If there is a major change in federal tax rules at any time during the year, we will update those changes as soon as possible when they go into [...]