Retirement Monte Carlo Calculator (Australia)

What the retirement monte carlo calculator does

This retirement monte carlo calculator simulates an Australian superannuation balance through 1,000 possible market histories, first while contributions go in and then while a retirement income comes out. It takes your current balance, salary, years to retirement, the income you want from super, how long it has to last, your expected return and your volatility. It applies the superannuation guarantee and any salary sacrifice net of contributions tax, and reports a pessimistic, median and optimistic balance at retirement together with the probability that the income lasts.

The range is the point. A projection that gives your super a precise value in twenty years is precise and misleading. On the default assumptions the median balance at retirement is around A$1.1 million, a poor run of markets leaves you nearer A$640,000, and a good one takes you close to A$2 million. Drawing A$35,000 a year in today's dollars for 25 years, the money lasts on about 55 per cent of the paths, which is close to a coin toss and exactly the kind of answer a single-number projection hides.

How the simulation works

Each of the 1,000 paths is a sequence of yearly returns drawn at random from a lognormal distribution. Its average is the expected return you enter, its standard deviation is your volatility, and it never produces a year worse than losing everything. Fund fees come off each year's return before it is applied.

Until retirement, each path grows at its own returns and receives the year's net concessional contribution. From retirement the path pays out the income you set, in today's dollars and increased with inflation every year, at the end of each year. If a path's balance cannot cover a year's payment, that path has run out of money: it stays at zero and counts as a failure. The probability the money lasts is the share of the 1,000 paths that never run out.

At retirement the calculator lines up the 1,000 balances from lowest to highest and reads off the 10th percentile, the median and the 90th percentile. The chart follows the same three percentiles year by year through both phases, so you can watch the fan widen while you save and see the weaker paths reach zero while you draw down.

Why the same inputs always give the same answer

Many simulations draw fresh random numbers each time and give a slightly different answer on every run. This calculator uses a seeded random number generator, so the same inputs always produce the same 1,000 paths and exactly the same result. Change the salary sacrifice and the market paths stay the same; only the contributions change. The difference you see is therefore the effect of your decision rather than simulation noise, which is what makes the tool useful for comparing options.

Contributions, tax and the concessional cap

Australian super has its own mechanics, and every path follows them.

The superannuation guarantee is applied to your salary at the current rate, currently 12 per cent, and added to any salary sacrifice you enter. That combined figure is your concessional contribution for the year.

Concessional contributions are capped. Anything above the cap is reported separately as excess, because excess concessional contributions are included in your assessable income and taxed at your marginal rate with an offset for the tax the fund already paid. Keeping the excess visible rather than silently investing it stops the result flattering a plan that would not work in practice.

Contributions inside the cap are taxed at 15 per cent going into the fund, so the calculator invests the net amount. On a A$95,000 salary the guarantee is A$11,400 gross and A$9,690 net. If you have stopped working, or you are modelling a fund with no employer contributions, switch the guarantee off and the balance grows on returns alone.

Fees, inflation and the retirement income

Fees come out of every year's return. An expected return of 7 per cent with fees of 0.7 per cent leaves a net return of 6.3 per cent, and over twenty years that gap is worth well over a hundred thousand dollars on a typical balance. It is the single input most people leave at zero and should not.

Inflation is handled in two places. The retirement income you enter is in today's dollars and rises with inflation every year, so its purchasing power holds steady for as long as it is paid. The balance figures are nominal, and the today's-dollars line converts the median balance at retirement back into current purchasing power. The income at the assumed drawdown rate applies a rate set from the ATO's minimum payment rates for account-based pensions to the median balance, a rough guide to what a pension account must pay out each year.

Reading the range and the probability

The gap between the 10th and 90th percentiles measures how much uncertainty your assumptions carry. Two things widen it: higher volatility and a longer horizon. That is not a reason to avoid growth assets, whose median outcome is usually far higher over long horizons, but it explains why many funds move members toward lower-volatility options in the decade before they stop working.

Watch the median rather than the mean. The mean balance is always the higher of the two, because a handful of extraordinary paths pull it up. For the retirement phase, a probability above 85 per cent leaves room for bad luck. Between 60 and 85 per cent the plan works if you are willing to trim spending after poor years. Below 60 per cent the plan needs a real change, such as saving more, working longer or planning on a lower income.

What this projection does not model

It assumes a level contribution in nominal terms, so it does not model salary growth, career breaks or a change of hours. It treats each year's return as independent of the last and keeps the expected return and volatility constant, and its lognormal returns are smoother in the extremes than real markets. It applies no tax after retirement, ignores the transfer balance cap and the legislated minimum drawdowns that rise with age, and takes no account of the age pension, which for most Australians would pay part of the income entered here. With 1,000 paths the probability carries a sampling error of about one to two percentage points.

Use it to understand the shape of the range and the odds, then check the specifics against a fuller retirement plan.

This tool provides an estimate for general information only and is not financial or superannuation advice. Investment returns are not guaranteed and past performance does not predict future results. Confirm the current guarantee rate, contributions tax and concessional cap with the ATO, and speak to a licensed financial adviser before acting on the figures.

About This Tool: Retirement Monte Carlo

Retirement monte carlo: use this tool to get an instant, accurate estimate. The figures follow official ATO guidance and every rate and threshold is kept up to date for 2026. Adjust the inputs above to match your situation, or browse all our calculators to plan your next step.