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.
Another method is to add up the total bills, such as credit cards, mortgages, car payments, loans and funeral costs, while also estimating and anticipating future bills (the need for a new car, tuition for your children,
inflation etc.) If the
goal is to simply replace an income, as might be the case when both spouses are professionals, the estimate should be based on the annual income multiplied by the
number of years of income that you want the life insurance to cover.