statsguy:

Al.... thanks for the clarifying post.

Chin... heuristic arguments are not insightful in this situation. It may feel good but it does not say anything about 4% being a safe withdrawal rate, when you say the worst historical case in the last 50 years survived a 4% withdrawal rate.  Monte Carlo looks at many different scenarios most of which have not occurred in the past... but may occur in the future.

BTW... I recall the 4% SWR having a higher percent success rate, more like 97-99, rather than 95.  So rather than a 1 in 20 chance, the odds are more like 1 in 50.

Anyway, Al your post clarified my thinking and why I am unsettled with this restarting idea. Sometimes you need to step back and think about the bigger picture.  That is what your post did for me, it said what is this probability that MC is calculating.  paraphrasing.... the probability is the chance of a portfolio not surviving a 25 to 30 year time horizon given the starting point.

Actually stats, I agree with this. It was not 50 years, but 80 years, and the odds the more simple portfolio will not work in the future would be based on the odds of something worse than what happened in 1929 and 1966 - 1981 happening in the future. It could, but we cannot offer quantitative odds and probabilities on this.

It is not because of the Monte Carlo I agree though. Read the prior response to the Monte Carlo Simulator and trusting it to give you the right numbers.

Diversification helps, a lot, but probably the best way to secure your retirement would be to not retire depending on the income from 4% withdrawal rate to survive, but to live comfortably, and be able to cut back some without pain. Did I already say that?

BTW, Wifey wouldn't let me quit working either; dad burn common sense talking women. :o),

Chin