Retirement Monte Carlo Simulator (Canada)

What the retirement Monte Carlo simulator does

Instead of a single projected balance that will certainly be wrong, the simulator estimates the probability that your savings outlast your retirement. Enter what you have, what you add, what you plan to spend and how long the money must last. It simulates 1,000 market histories and reports the share in which the money lasts, the spread of savings you might have at retirement, and the spending the plan could support.

On the default assumptions the median savings at retirement are about $1.33 million, but weak markets produce about $911,000 and strong ones about $1.94 million. Which you get decides whether the plan works, so a probability is a fairer summary than any one balance.

How the simulation works

Each path is a sequence of yearly returns drawn from a lognormal distribution with your expected return as its average and your volatility as its standard deviation. The lognormal is the standard model for investment returns: it allows large gains and never a loss of more than everything.

On each path your balance compounds at that path’s returns, with contributions added at the end of each year until retirement. Then withdrawals begin: each year the portfolio pays the part of your spending that CPP and OAS do not cover, raised with inflation, at year end. A path that cannot cover a year’s withdrawal has run out and counts as a failure. The chart shows the median, 10th and 90th percentiles year by year.

The seeded generator reproduces the same 1,000 paths for the same inputs, so any difference after a change comes from your change, not from simulation noise.

A worked example

With $600,000 saved, $15,000 added a year for 12 years, $65,000 of spending for 30 years, a 5.5% return with 10% volatility, 2% inflation, 75% of maximum CPP and full OAS, the plan succeeds on about 69.2% of paths. CPP and OAS provide about $22,719 a year, so the portfolio must find about $42,281 in today’s dollars, about $54,695 in the first year of retirement after inflation. A steady 4.07% return would be enough, and the plan could support about $81,650 of spending at a steady expected return. The median balance left at the end is about $1.04 million.

Why the order of returns matters

Two retirees with the same average return can end up far apart. If the bad years come first, withdrawals come from a shrunken portfolio, losses are locked in and less capital is left for the recovery. If they come late, most of the spending has already been funded. Because each path is simulated a year at a time, this sequence risk is built into the probability, which is why a plan whose expected return clears its break-even rate can still fail on many paths, as in the example.

Why CPP and OAS come off the top

The maximum CPP pension at 65 and the maximum OAS for ages 65 to 74 are loaded as parameters. Few people receive full CPP, which needs close to forty years of maximum contributions, so the tool defaults to 75%. OAS defaults to the full amount, since it depends on residence rather than earnings, though the recovery tax claws it back at higher incomes.

Reading the numbers that matter

Success probability: above 90% the plan has room to spare; 75% to 90% is normal and manageable if you are willing to trim spending in a bad decade; 60% to 75% works only if you are ready to cut spending or work longer when markets disappoint; below 60% it needs a real change, not a more optimistic return.

Required steady return: the constant return at which the money runs out exactly at the horizon. Needing 4.1% while expecting 5.5% is a real margin; needing 7.5% is not achievable reliably after fees.

Funding gap: the median savings at retirement against the capital the plan needs on the day work stops, at a steady expected return. A zero gap means the middle outcome clears the bar, not that success is certain.

Sustainable spending: the spending, including CPP and OAS, the plan funds exactly at a steady expected return, often the quickest route to a target worth planning around.

Estate at the end: the median final balance, counting paths that ran out as zero.

The contribution limit and other mechanics

Contributions are capped at the RRSP dollar limit, a parameter. If you enter more, the calculator uses the limit and shows the figure applied. Withdrawals grow with inflation from the day you start the calculation, so the first-year withdrawal is in the dollars of the year it is paid and is higher than the target you typed.

What the model leaves out

It applies no tax in retirement: RRSP and RRIF withdrawals are fully taxable, TFSA withdrawals are not, and non-registered accounts sit in between, so enter spending gross of tax if your savings are mostly registered. It treats each year’s return as independent, keeps return and volatility constant, and its lognormal returns are smoother in the extremes than real markets. It ignores RRIF minimum withdrawals, salary growth, career breaks and the OAS recovery tax. With 1,000 paths the probability carries a sampling error of about one to two points, so a one-point difference between scenarios means little.

This tool provides an estimate for general information only and is not financial, tax or retirement advice. Investment returns are not guaranteed and past performance does not predict future results. Confirm the current CPP and OAS maximums with Service Canada and speak to a licensed financial planner before acting on these figures.

About This Tool: Retirement Monte Carlo Canada

Retirement monte carlo canada: use this tool to get an instant, accurate estimate. The figures follow official CRA 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.