The Importance of Planning

March 2, 2023

“If you fail to plan, you plan to fail.”

The importance of planning cannot be overstated. With so many uncertainties and possibilities in retirement it’s easy to assume you needn’t bother with a plan. However, with the rise of technology we have the ability to model these uncertainties and possibilities in a way that was previously impossible. Greenberg Financial Group uses a financial planning software called MoneyGuide which allows us to model the probability of success for a certain plan even amongst various variables.

Everyone’s plan is different, some of these differences include:

Expenses

Pension Income

Social Security benefits

Longevity

Retirement Assets

By using the MoneyGuide software, we are able to input assumptions for these various variables to find the probability of success for a plan. The way MoneyGuide defines “success” is to live throughout retirement without running out of money.

One of the coolest things this software uses to find the probability of success is called a Monte Carlo simulation. Since no one knows what the future returns of the market will be, there is no simple yes or no answer on whether or not you will outlive your money. However, with the Monte Carlo simulation they run 1000 trials of your financial plan using 1000 different return possibilities to calculate the probability your plan will be successful. A picture of what the Monte Carlo simulation looks like is below.