Probability Tab - Retirement Analysis - RightCapital Help Center

The Probability tab is the first of five sub-tabs available within the Retirement > Analysis module. This area allows you to create additional proposed plans, and to see the Probability of Success and Median Ending Asset Values for two plans side by side:

Every plan in RightCapital will start with a Proposed Plan on the left, and a Current Plan on the right. The Current Plan is always a direct reflection of the data entry coming from the Profile tab, and is meant to represent the client's current financial picture. The Proposed Plan on the left will use the Current Plan as a baseline, and will factor in any changes made using the Action Items at the bottom of the page. This setup allows you to dynamically model recommendations and what-if scenarios, and see the impact on a client's probability of success in real time.

Action Items

The Action Items represent adjustable data entry inputs and planning strategies that contribute to a successful retirement plan. Here you can adjust every input and variable feeding in from the client's Profile, import curated strategies from a variety of planning modules, and even add new items that do not currently exist in the Current Plan. Any changes made or new items added will impact the Proposed Plan, highlighting the change in Probability of Success, Median Ending Invested Assets, and more:

For more details on the Action Items...

Please see the article below for a comprehensive overview of the Action Item functionality, including proposing changes, implementing strategies, and adding new items:

Action Items - Retirement Analysis

Create Additional Proposals

To create additional proposed plans within the Retirement > Analysis > Probability tab, you can click the Pencil & Paper icon next to the Current Plan on the right side of the page. When creating a new plan, you can either start fresh by clicking the Add New Plan button in the lower right of the drawer, or you can copy an existing proposal by hovering over that plan and clicking Copy:

After naming your plan and clicking OK, that plan will become available to select on both the left and right sides of the Probability tab via dropdown menus. Selecting a plan on the left-hand side allows you to make edits to that proposal using the Action Items. The plan selected on the right-hand side is for comparison.

For more details on the Creating Multiple Proposals...

Please see the article below for a comprehensive overview of creating and working with multiple proposed plans:

Creating Multiple Proposed Plans

Probability of Success

The probability of success is based on a Monte Carlo simulation that runs a client's plan through 1,000 trials. The simulation factors varying levels of market volatility into each and every trial to create a comprehensive range of potential outcomes. The probability of success demonstrates the percentage of those trials that are successful, i.e. the trials that do not run out of money at any point during the client's plan.

Even if the simulation registers assets remaining in the last year of their plan, the overall probability of success will decrease if there are any years in which the simulation reports $0 within their projection. This can be best visualized by using the Confidence chart in the tab to the right of Probability (more on this here).

While it is difficult to pinpoint a universal percentage that qualifies as a "good" probability of success, 80% is often cited as a standard benchmark for a reasonable PoS%. That being said, there are various schools of thought when it comes to interpreting Monte Carlo, and in many cases the "target" probability of success is highly dependent on a client's age and willingness to make adjustments in the case of poor markets or unforeseen circumstances. Please feel free to use and interpret RightCapital's Monte Carlo analysis in accordance with your own perspective and advising philosophy.

Median Ending Invested Assets

The value in the green bar chart next to each PoS% reflects the ending invested asset value for the median Monte Carlo trial. While the median (also referred to as trial 500) only represents one possible outcome of many, this trial represents the "middle outcome" and is therefore a useful frame of reference. The median trial is visualized as a solid blue line within the Confidence chart:

Pro-Tip: Today's Dollars

By default, values displayed in the Retirement Analysis are "future" dollars. Future dollars illustrate the real projected dollar value in future years, factoring in all growth, inflation, and annual increase rates.

However, you can toggle from future dollars to "today's" dollars at any time using the toggle in the lower right of the chart/visuals. With today's dollars selected, RightCapital will discount the values calculated by your general inflation rate, which can help put things into perspective for you and your clients (especially for younger clients with long plan durations):