Methodology

This page is for the careful reader. If you want to know exactly how Yearfold turns your inputs into a success probability, this is the long version. If you have something to flag — a number that looks wrong, a 2026 rule we missed, a citation that doesn't hold up — write to hello@yearfold.com. We update this page whenever a data source changes.

The 30-second version

You give Yearfold five inputs (your age, your savings, your monthly contribution, your target retirement age, and your monthly retirement spending). The engine plays out 10,000 simulated retirements against real US market history from 1928 to 2025, with returns and inflation paired month-by-month so the correlations are honest. For each simulated future it tracks your portfolio month by month from now to age 95 (or until a younger partner turns 95), applies Social Security and Medicare under the 2026 rules, and records the balance trajectory. The output is a probability distribution — not one cheerful number — plus three concrete fixes when you're not on track.

When the plan includes other income — a pension, part-time work, rent, an annuity — or one-time events like a home sale, those enter the same months of every simulated future; see Income streams.

What "Monte Carlo" actually means here

Monte Carlo simulation was invented in the late 1940s by Stanislaw Ulam and John von Neumann at Los Alamos, originally to model neutron diffusion in atomic-bomb cores. Ulam reportedly came up with the technique while playing solitaire in recovery from an illness — wondering how to estimate his odds of winning, he realised the calculation was easier if you just dealt the cards a thousand times and counted. The name was Nicholas Metropolis's, after Ulam's uncle who borrowed money to gamble at Monte Carlo. The technique migrated into finance in the 1960s as computers got cheap enough to run thousands of trials, and is now standard inside every major brokerage and pension fund.

The principle is simple: when a problem has too many variables to solve analytically, replay the past — in different orders, with random sampling — many thousands of times, and read the answer off the resulting distribution.

Monte Carlo simulation is a way of answering "what's likely to happen?" by replaying the past, in different orders, ten thousand times.

For each of those 10,000 simulated retirements, we step through your life month by month from your current age to age 95 — for a couple, until the younger of you turns 95. At each step we apply a market return drawn from history, an inflation rate drawn from the same month, your contributions while working, your withdrawals once retired, and any Social Security income. We record your portfolio balance at every age.

Across the 10,000 paths, we then ask:

• In how many did your money last to the end of the plan (age 95, or the younger partner's 95)? (success probability)
• What was the median portfolio balance at each age? (P50 line)
• What did the worst 1-in-10 path look like? (P10 — the "rough seas" outcome)
• What did the best 1-in-10 look like? (P90 — the "calm" case)
• For the failed paths: at what age did the money run out? (depletion distribution)

The output isn't a forecast. It's a stress test of your plan against scenarios that have actually happened in US economic history.

+View data table

Year	Single-line 7% projection	Monte Carlo P10	Monte Carlo median (P50)	Monte Carlo P90
0	$1,000,000	$1,000,000	$1,000,000	$1,000,000
5	$1,172,522	$750,000	$1,100,000	$1,600,000
10	$1,414,493	$500,000	$1,300,000	$2,500,000
15	$1,753,871	$200,000	$1,500,000	$4,000,000
20	$2,229,865	$0	$1,600,000	$5,500,000
25	$2,897,471	$0	$1,400,000	$7,000,000
30	$3,833,824	$0	$1,200,000	$8,500,000

Source: Illustrative simulation calibrated to S&P 500 1928–2025 bootstrap (Shiller / NYU Stern) · Last reviewed May 26, 2026

The historical data

We use monthly returns from 1928 through 2025 (98 years, 1,176 months) for two asset classes:

• US large-cap stocks — S&P 500 total return (price + reinvested dividends).
• US 10-year Treasuries — total return (yield + price change from yield moves).

Inflation comes from the CPI-U index (Consumer Price Index for All Urban Consumers), published monthly by the Bureau of Labor Statistics.

These three series are drawn jointly from the same historical month. If a simulated path samples June 1932, it gets June 1932's stock return, June 1932's bond return, and June 1932's inflation rate together. This preserves the correlation between asset classes and the macroeconomic regime — bond/stock correlations are not constant over time, and naive independent sampling would understate joint risk.

Why bootstrap, not parametric simulation

A common alternative to historical bootstrap is parametric simulation — assume returns are log-normally distributed with mean μ and standard deviation σ, then draw from that distribution. We don't, for two reasons:

1. Real returns aren't log-normal. Equity markets have fat tails. Crashes happen more often than a Gaussian would predict, and they happen in clusters (volatility persists). Bootstrapping from real history captures this.
2. Returns aren't independent across months. There's measurable serial correlation in volatility regimes. The 1929-1932 sequence of monthly returns isn't well described by independent draws from a single distribution.

The honest tradeoff: bootstrap restricts you to the regimes that have already happened. The next 30 years could include a regime worse than anything in 1928-2025. We think that's a fair limitation to acknowledge — and it's why we publish the P10 band and the depletion distribution, not just the median.

Asset allocation

You pick one of three preset allocations on the calculator. Each is a fixed mix of stocks and bonds:

• Conservative: 30% stocks / 70% bonds
• Balanced: 60% stocks / 40% bonds
• Growth: 80% stocks / 20% bonds

Each simulation rebalances monthly back to your target weights. Real-world cash positions, alternative assets, and individual security holdings are not modeled — they fold into the broad asset-class returns above.

In a future release we'll let you specify a glide path (more conservative as you age) and add a real-estate / REIT class.

+View data table

Years since retirement	Retire 1929	Retire 1966	Retire 1973	Retire 2000	Retire 2008
0	$1,000,000	$1,000,000	$1,000,000	$1,000,000	$1,000,000
5	$441,500	$766,902	$504,857	$574,628	$740,720
10	$424,950	$483,555	$405,946	$333,515	$1,184,476
15	$189,740	$395,539	$495,242	$347,013	$1,350,362
20	$50,325	$334,681	$602,393	$299,901	— (data ends 2025)
25	— (data ends 2025)	$294,384	$1,003,853	$241,987	— (data ends 2025)
30	— (data ends 2025)	$287,190	$724,678	— (data ends 2025)	— (data ends 2025)

Source: S&P 500 1928–2025 (Damodaran / NYU Stern) · CPI (US BLS) · series rebuilt in lib/monte-carlo/historical-returns.ts · Last reviewed May 26, 2026

Social Security

You enter each person's monthly benefit at full retirement age — the Primary Insurance Amount (PIA) on your statement at ssa.gov/myaccount. Yearfold doesn't estimate it from your income. The simulation then applies the 2026 SSA rules:

1. Claim-age adjustment — each person's benefit is adjusted for their own claim age: 5/9 of 1% less for each of the first 36 months before full retirement age (67) and 5/12 of 1% for each month beyond that (30% less at 62), and 2/3 of 1% more for each month of delay up to 70 (24% more).
2. Each partner on their own clock — a partner's benefit starts when they reach their claim age. A partner eight years younger who claims at 67 starts collecting when you're 75; a partner who is already collecting counts from today.
3. Spousal benefit — once you've both filed, the lower earner also gets the amount by which half of the other's PIA exceeds their own PIA, reduced for their age when the spousal benefit begins (25/36 of 1% a month for the first 36 months before 67, 5/12 of 1% beyond that; no delay credits). A partner with no earnings record gets only this amount. Source: SSA — benefits for your spouse.
4. Both partners alive to the end — the simulation assumes you both live to the end of the plan; there is no survivor switch inside it. What happens to the household when one of you dies — the survivor keeps the larger check, with the widow(er)'s limit — is modeled in the Couples tier's Social Security timing and joint & survivor analyses.
5. Plan horizon — the plan runs until the younger partner turns 95 (singles, and couples where the partner is the same age or older, to your 95). Partners retire at the same age.
6. COLA (Cost of Living Adjustment) — each January, we apply the simulated year's inflation rate as the COLA. This means Social Security real income stays roughly flat through inflation regimes.

Claim-age values

The results page's Social Security tab and the PDF compare claim ages by expected value: each month's benefit, weighted by the chance of being alive to receive it (2023 SSA period life table, men and women averaged — we don't ask anyone's sex), in today's dollars, discounted at a 1%, 2% or 3% real rate. Every option is valued at the same moment — age 62, or today if you're older; for a couple, when the older of you turns 62 — so a later claim pays for the wait and the chance of not reaching it. The age with the highest expected value moves with the discount rate, so we show the range rather than one age. Survivor benefits aren't counted on the free tab; the Couples tier counts them.

What we don't model yet:

• Survivor benefits inside the simulation (see the Couples analyses), and the survivor-benefit reduction for claiming before full retirement age.
• The earnings test for anyone who claims before full retirement age while still working.
• Separate retirement ages for each partner.
• Disability or auxiliary benefits.

+View data table

Age	Claim at 62 ($2,100/mo)	Claim at 67 ($3,000/mo)	Claim at 70 ($3,720/mo)
62	$0	$0	$0
67	$126,000	$0	$0
70	$201,600	$108,000	$0
75	$327,600	$288,000	$223,200
79	$428,400	$432,000	$401,760
80	$453,600	$468,000	$446,400
83	$529,200	$576,000	$580,320
85	$579,600	$648,000	$669,600
90	$705,600	$828,000	$892,800
95	$831,600	$1,008,000	$1,116,000

Source: SSA — Retirement Benefits: Effect of Early or Delayed Retirement · Last reviewed May 26, 2026

+View data table

Phase	Years	Strategy A (both at 67)	Strategy B (62 / 70)
62–66 (lower active, higher delaying)	5	$0	$84,000
67–69 (FRA reached for both)	3	$180,000	$50,400
70–84 (both claiming)	15	$900,000	$921,600
85–95 (lower survives, survivor benefit kicks in)	11	$396,000	$491,040
Total lifetime household benefit	—	$1,476,000	$1,547,040

Source: SSA — Retirement Benefits + Survivors Benefits · Last reviewed May 26, 2026

Social Security cut

The results page includes a free, optional 2032 benefit-cut scenario. The June 2026 Social Security Trustees Report projects that the retirement (OASI) trust fund's reserves are depleted in the fourth quarter of 2032, after which incoming payroll taxes cover about 78% of scheduled benefits — roughly a 22% across-the-board reduction under current law.

When you enable the scenario, the engine re-runs all 10,000 paths with one change: from calendar year 2032 onward, every Social Security benefit (yours and your spouse's) is multiplied by 0.78. COLA still accrues each January, on the reduced benefit. Nothing else changes — same seed, same market and inflation draws — so the difference in success probability reflects the benefit cut alone, not simulation noise. Your plan is shown under current law and under the cut, side by side.

This is a projection under current law, not a prediction. Congress has acted before a depletion deadline in the past (most recently the 1983 amendments) and could change the outcome. The 2032 date and the 78% payable share come from the 2026 Trustees Report summary, and we revise the scenario each year when the new report lands (around June). For the dollar impact and why claiming early to "beat the cut" usually backfires, see Social Security's 2032 deadline.

Income streams

Social Security isn't everyone's only income. The income planner — rolling out now — adds pensions, part-time work, rental income, annuities and other income, plus extra recurring expenses, one-time life events and spending that changes with age. Free plans use one income stream; Pro uses everything. Here is exactly how the engine treats them.

The plan clock is your age. A stream that belongs to your spouse uses your spouse's age, converted with the age gap — if your spouse is three years younger, a pension that starts at their 60 starts at your 63.

Streams count only after you retire. Before your retirement age we assume the household spends that income; it's already reflected in what you save each month. From retirement, each month a stream is paying (from its start age, up to but not including its end age), it lowers the amount withdrawn from your savings. An extra expense works the other way: it adds to what's withdrawn.

What the amount means. You choose whether the amount is in today's dollars (we grow it with that simulated future's inflation until it starts) or the amount on your statement when it starts (used as given — how pension and annuity statements usually show it).

Yearly increases. "Follows inflation" moves with each simulated future's inflation. A fixed increase steps up once a year after the start, the same yearly rhythm as Social Security's cost-of-living increase here. "No increases" keeps the same dollar amount every year — so its buying power falls as prices rise.

Spending phases multiply your retirement spending for the ages you choose — for example 90% from 75 to 85, then 80% — and you spend 100% outside them.

When income is more than you spend in a month, Yearfold assumes you spend the difference — the same conservative treatment as Social Security — unless you turn on save surplus income, which adds it to your savings.

Life events

A one-time amount in or out — a home sale, an inheritance, a big purchase — happens in the month you reach the age you set, before or after retirement. Enter it after taxes. Money coming in is added to your savings; money going out is withdrawn and, like any withdrawal, can run your savings out. A today's-dollars amount grows with that future's inflation until it happens.

What this doesn't model

• Taxes on each stream separately. Your spending target is meant to include taxes; the engine doesn't compute tax stream by stream.
• Mortality. Every stream pays for its whole span. A pension's survivor percentage is used only in the survivor analysis.
• Same markets, fair comparisons. None of these inputs change the random seed, so a plan with and without an income stream runs on the same simulated markets and the difference is the stream alone. The income teaser for free plans, and the Pro analyzers (pension lump sum vs. monthly, income annuity, long-term-care costs, spending phases), all compare this way.

The Income tab on the results page shows an income floor — what each source pays against your spending, by age, in today's dollars — computed straight from your inputs rather than from the simulations, with a 3% inflation assumption unless you've set your own.

Medicare

For retirees age 65+, we apply 2026 Medicare costs:

• Part B base premium: $202.90/month (2026 CMS-final).
• Part D base premium: $38.99/month (2026 national base beneficiary premium).
• IRMAA surcharges for high-MAGI households: tiered surcharges based on the 2026 IRMAA brackets, applied per-spouse for couples. First-tier MAGI thresholds: $109,001 (single) / $218,001 (married filing jointly); top tier: $500,000 / $750,000. See The IRMAA cliff for the full bracket table and the 2-year-lookback mechanic.

Healthcare is the single biggest source of variance in retirement spending. Our defaults assume Medicare A (free), B + D plus a Medigap premium of approximately $200/month per person. Long-term care costs are NOT modeled — that's a separate risk requiring dedicated insurance or self-funding.

Inflation

Inflation is sampled jointly with returns (see above). For Social Security COLA and for inflation-adjusting your monthly retirement spending target, we use the simulated year's CPI-U change.

When your inputs are in "today's dollars" (e.g., your $5,000/month spending target), we inflate them year over year so the real purchasing power stays constant.

Federal income tax

We apply the 2026 federal tax brackets:

• Standard deduction — $16,100 single, $32,200 married filing jointly.
• Marginal brackets — 10% / 12% / 22% / 24% / 32% / 35% / 37%.
• Social Security taxation — up to 85% of benefits taxable depending on combined income; we apply the standard 1983 / 1993 worked formula.
• RMDs (Required Minimum Distributions) start at age 73 for traditional IRAs and 401(k)s, using the 2022 SECURE 2.0 Uniform Lifetime Table.

For a plain-English breakdown of what the 2026 federal brackets are and why they look this way after the One Big Beautiful Bill Act made them permanent, see The TCJA cliff was averted.

What we don't model:

• State income tax. Florida, Texas, and a handful of other states have no state income tax; California and New York are above 9% at retirement-relevant income levels. State tax can move your effective retirement tax rate by several percentage points. Add it manually if it matters for your situation.
• Capital gains brackets. All taxable income is treated as ordinary for now.
• Roth conversion ladders.
• Tax-loss harvesting.

These will land in the Pro tier in 2027.

Withdrawal strategy

In retirement, your monthly spending target (in today's dollars, inflated to the simulated year) is funded in this order:

1. Pre-tax accounts (Traditional IRA / 401(k)) until RMDs begin at 73.
2. Taxable accounts when funded.
3. Roth accounts last (so they continue compounding tax-free).

This is a simplified version of the "tax-efficient withdrawal" approach commonly recommended by fee-only advisors. It is NOT the only valid strategy — for some households, a small Roth conversion ladder during low-income early retirement years materially improves outcomes. Yearfold doesn't simulate that yet.

+View data table

Year	Bad-first return	Bad-first balance	Good-first return	Good-first balance
0 (start)	—	$1,000,000	—	$1,000,000
1	-15%	$810,000	23%	$1,190,000
2	-15%	$648,500	23%	$1,423,700
3	-15%	$511,225	23%	$1,711,151
4	-15%	$394,541	23%	$2,064,716
5	-15%	$295,360	23%	$2,499,600
6	10%	$284,896	10%	$2,709,560
7	10%	$273,386	10%	$2,940,516
8	10%	$260,724	10%	$3,194,568
9	10%	$246,797	10%	$3,474,025
10	10%	$231,476	10%	$3,781,427
11	10%	$214,624	10%	$4,119,570
12	10%	$196,086	10%	$4,491,527
13	10%	$175,695	10%	$4,900,680
14	10%	$153,265	10%	$5,350,748
15	10%	$128,591	10%	$5,845,823
16	23%	$118,167	-15%	$4,928,949
17	23%	$105,345	-15%	$4,149,607
18	23%	$89,575	-15%	$3,487,166
19	23%	$70,177	-15%	$2,924,091
20	23%	$46,317	-15%	$2,445,477

Source: Constructed example calibrated to S&P 500 1928–2025 return distribution (Shiller / NYU Stern) · Last reviewed May 26, 2026

Spending guardrails

The withdrawal strategy above answers "which accounts do I draw from?" The Spending Guardrails feature (Yearfold Pro) answers the question every retiree actually asks each year: "how much can I safely spend this year?"

It uses the Guyton-Klinger decision rules — the most widely understood framework for dynamic withdrawals. Instead of the static "4% rule" (spend a fixed, inflation-adjusted amount no matter what markets do), Guyton-Klinger flexes your spending within two guardrails:

• Withdrawal rule — start at a chosen rate (we derive yours from your plan, clamped to a sane 3–7%) and adjust for inflation each year.
• Capital Preservation rule (a "cut") — if a downturn pushes your current withdrawal rate more than ~20% above your starting rate, trim spending by ~10%. You trim only when you cross the guardrail, not on every dip.
• Prosperity rule (a "raise") — if strong markets pull your rate more than ~20% below your starting rate, you can raise spending by ~10%.
• Modified inflation rule — skip the inflation raise in any year your portfolio lost money.
• Guardrails are suspended in roughly the final 15 years of the horizon (less time to recover), and all of these are adjustable.

Every number is computed by the same deterministic engine and historical-bootstrap data described above — applied year by year, in today's dollars. We also report the success probability of following the guardrails versus spending a fixed amount, so you can see what the discipline is worth. This is an educational framework for sizing a spending range; it is not advice, and it never tells you which specific account or fund to draw from.

Primary source: Jonathan Guyton & William Klinger, "Decision Rules and Maximum Initial Withdrawal Rates" (Journal of Financial Planning, 2006) — the original framework.

What we don't simulate

We've been honest about the gaps already, but here's the consolidated list. None of these are in v1; some are planned for 2027:

• State income tax
• Long-term care insurance (a care-cost shock can be tested as a what-if in the Pro income planner)
• Healthcare events that breach Medicare's out-of-pocket maximums
• Mortality inside the simulation: both partners are assumed to live to the end of the plan. Claim ages are compared separately, by expected value on the life table (see Claim-age values); the simulation uses the claim ages you pick.
• Annuity products beyond a level income annuity entered from your own quote (deferred annuities, QLACs)
• Mortgage payoff strategy and reverse mortgages (rental income can be added as an income stream)
• Self-employment retirement vehicles (SEP-IRA, Solo 401(k), defined-benefit cash-balance plans) beyond simple contribution amounts
• Behavior — selling at the bottom, panic moves, holiday spending
• Sequence-of-returns hedging strategies (bond tents, rising equity glide paths, bucket strategies)
• Uncertain windfalls — an inheritance or a home sale can be entered as a one-time life event at an age you choose, but not as a probability

Numerical and software notes

• Random number generator. We use a seeded mulberry32 PRNG so simulations are reproducible. The default seed is derived from the current timestamp; pass a fixed seed in tests for byte-stable output.
• Floating point. All money is stored as number (IEEE 754 double precision). Compounded over 70 years × 10,000 paths, accumulated rounding is well below the precision of any input you'd enter. We round to whole dollars only on display.
• Web Worker. The 10,000-path simulation runs in a Web Worker so the UI thread stays responsive. On an M1 MacBook Air, a typical run completes in well under one second; on a 2020 mid-range Android device, in roughly two seconds.
• Privacy. Your inputs never leave your browser unless you explicitly save a plan (which requires sign-in) or generate a PDF. Anonymous aggregate telemetry — success probability bucket, household type, run time — is recorded so we can monitor calculator health.

Update cadence

Each underlying number gets refreshed on a known schedule, anchored to the official source's publication date:

When a number changes, the change log below records it and the Last reviewed date in the page header is bumped. If you're using a saved plan and the rules change, you'll see a "rules updated" banner the next time you open it with a one-click "re-run with the current rules" action.

Change log

Model changes

Changes that move results for existing plans are labelled with an engine version; Plan Pulse and the annual re-run email point here when one of them moved your plan.

Sources

We cite primary sources for every number that matters. Each link below is the canonical page; the last accessed date is when a Yearfold human last verified the page existed and the cited number matched.

• Social Security Administration — bend points, PIA formula, claim age adjustments. ssa.gov/oact/cola/Benefits.html · last accessed 2026-05-04
• SSA period life table, 2023 (2026 Trustees Report) — used for claim-age values and the Couples survivor analysis. ssa.gov/oact/STATS/table4c6.html · last accessed 2026-10-27
• SSA spousal and survivor rules — spousal benefit and reduction (ssa.gov/OACT/quickcalc/spouse.html), survivor benefits (ssa.gov/benefits/survivors), widow(er)'s limit (POMS RS 00615.320) · last accessed 2026-10-27
• Centers for Medicare and Medicaid Services — Part B premiums, IRMAA brackets. cms.gov/medicare/medicare-costs · last accessed 2026-05-04
• IRS — federal tax brackets, standard deduction, RMD tables. irs.gov/retirement-plans · last accessed 2026-05-04
• Bureau of Labor Statistics — CPI-U inflation series. bls.gov/cpi · last accessed 2026-05-04
• Federal Reserve / FRED — historical interest rate and macroeconomic series. fred.stlouisfed.org · last accessed 2026-05-04
• Yale / Robert Shiller — long-run S&P 500 total return data with CAPE. shillerdata.com · last accessed 2026-05-04
• Tax Foundation — annual state income tax roundup used for the 50-state effective-rate table. taxfoundation.org/data/all/state · last accessed 2026-05-04

If we got something wrong, please tell us at hello@yearfold.com. The "last reviewed" date in the page header reflects the most recent end-to-end check of every section.