In order to properly use Monte Carlo in retirement planning,
dozens to hundreds
of inputs need to change to reach a Real World probability number: Life expectancy, age
of retirement, investment payouts, yields vs. share selling, investment returns, inflation,
income goals, Social Security, all
of the
types of taxes, pension payouts, annual cash flow surpluses and deficits, random earned
incomes, replacing vehicles every ten years, allocation mix changes over time; and then duplicate all
of that for every investment individually, then for the spouse, then account for all
of that compounding in every year, and the list goes on and on.
For example I used to have a landscaping construction and maintenance company, and they gave me about a
dozen different data points for each neighbourhood in Calgary, things like
income, number
of homes, rental vs home owners, that
type of thing.