Don't Bet Your Retirement on Monte Carlo Models
When you sit down with a traditional financial adviser to plan your retirement you will provide her with the spending budget you have in mind. The adviser will adjust that amount for inflation and after running the numbers through a "black box" model, will predict how many years your retirement savings -- typically made up of cash, stocks and bonds -- will last.
The model to make this prediction is called "stochastic" -- a fancy way to describe what is a typical Monte Carlo simulation model.
What you should know about this modeling method
The problem is that it provides you with probabilities, not certainties -- which means your "planning"
