For most people approaching retirement, one question matters more than any other: Will my money last?

It sounds simple. The math behind answering it well is anything but.

For decades, the financial planning industry leaned on Monte Carlo simulation as the standard tool for answering this question. Run thousands of randomized market scenarios. Calculate the probability that a portfolio survives to age 90 or 95. Declare the plan sound if the odds are favorable enough.

It sounds like a reasonable approach. But at Mason, we believe it has meaningful limitations. Retirees with complex financial lives deserve something more rigorous.

Where Standard Withdrawal Models Have Limits

Monte Carlo simulation works by generating thousands of randomized return sequences based on historical market data. The output is a probability: your portfolio has an 87% chance of lasting 30 years, for example.

The limitation isn’t the math. It’s what the math doesn’t account for.

Standard Monte Carlo models are valuable for many planning purposes, but they often treat spending, market returns, and inflation as independently distributed variables. For the specific question of whether a portfolio’s allocation, spending level, and risk tolerance are genuinely aligned, this approach can produce answers that feel precise but may not reflect the full complexity of a retiree’s situation.

For a retiree deciding whether to spend $180,000 or $220,000 per year, whether to hold 60% or 75% equities, and whether to retire at 62 or 65, the difference between a rigorous model and an approximation isn’t academic. It’s consequential.

The Question That Started Everything

In the years following the 2008–2009 financial crisis, Mason’s leadership began asking a harder question: could we build an analysis tool that truly guides clients to the most robust decision regarding their portfolio’s ability to meet their lifestyle spending and accumulation goals? It was not a small ask.

Our research team knew that building such a tool the right way would require integrating risk tolerance, spending strategy, asset allocation, time horizon, and portfolio composition into a single unified framework — not treating them as separate inputs to be adjusted independently.

After extensive research and deliberation, we committed to building it from the ground up. The result was a proprietary sustainable withdrawal analysis tool — a framework spanning more than six million data points — that allows clients and their advisors to evaluate risk, spending strategy, and asset allocation in alignment with one another, rather than in isolation.

What the Mason Sustainable Withdrawal Analysis Tool Actually Does

The Mason sustainable withdrawal analysis tool is built around a core insight: the question “how much can I withdraw?” cannot be answered in isolation from “how is my portfolio allocated?” and “what level of risk am I actually taking?”

These three variables — spending, allocation, and risk — form an interdependent system. Change one, and the others must be re-evaluated.

Our tool makes that interdependence explicit. For any given client scenario, it allows us to map the relationship between:

• Spending levels: what different annual withdrawal rates mean for portfolio longevity across a range of market environments. How will spending be impacted by actual inflation over time.
• Asset allocation: how different equity/fixed income mixes affect both growth potential and downside risk at various spending levels
• Risk tolerance: what clients are actually willing to experience in a down market, and whether their current allocation is consistent with that tolerance

The analysis tool was developed to serve both private client and endowment scenarios, incorporating feedback from Mason’s highly credentialed team of planners, CFPs, CPAs, and investment consultants over months of refinement. Our thinking on asset allocation strategy — the same disciplined approach that informs this tool — was later discussed in The Wall Street Journal, reflecting the rigor and depth Mason brings to every investment decision we make on behalf of our clients.

Why We Keep Our Sustainable Withdrawal Analysis Tool Proprietary

When our analysis tool was finished, we discussed publishing a more detailed paper on the methodology. We ultimately decided against it.

The reasoning was straightforward: this tool exists to benefit our clients. The insights it produces, the conversations it enables, and the decisions it supports are most valuable when they are focused entirely on the people we serve — not distributed as a general industry resource.

That decision reflects something fundamental about how Mason operates. We are not in the business of building tools to showcase our capabilities. We are in the business of helping clients make better decisions about their financial lives.

What This Means for You

If you are approaching retirement or already in it, the most important question to ask your advisor is not what is my Monte Carlo probability? It is: are my spending strategy, risk tolerance, and asset allocation genuinely aligned? If you have never had that conversation in a rigorous, integrated way, it may be worth having.

Retirement Withdrawal Model FAQs

Q: What is a sustainable withdrawal rate?

A: A sustainable withdrawal rate is the percentage of a retirement portfolio that can be withdrawn annually without depleting the portfolio over a defined time horizon. Standard guidance (such as the 4% rule) is a starting point, but a truly sustainable rate depends on asset allocation, risk tolerance, market conditions, and individual spending needs — all of which must be evaluated together. Most importantly, going forward people typically want to sustain a spending level on an inflation adjusted basis. For example, $400,000 per year, inflation adjusted not simply 4% of a beginning value. This is what allows you to confidently lock in your desired lifestyle.

Q: Why is Monte Carlo simulation limited when it comes to projecting market returns and inflation?

A: Monte Carlo simulation calculates the probability that a portfolio survives a range of randomized market scenarios. However, it was designed primarily to randomize spending and behavioral variables rather than to model the full historical range of market return sequences — particularly during periods of extreme market stress. A model that fails to align with real world outcomes may produce a probability that feels precise but doesn’t reflect the actual complexity of a retiree’s financial situation. While there may be instances where Monte Carlo analysis is useful, our Sustainable Withdrawal Analysis tool was designed to overcome significant weaknesses in terms of projecting market returns.

Q: How does Mason approach retirement withdrawal planning?

A: Mason uses a proprietary sustainable withdrawal analysis tool that integrates spending strategy, asset allocation, and risk tolerance into a single unified framework. Rather than producing a probability in isolation, the tool allows clients and advisors to evaluate how changes in any one variable affect the others — enabling more informed, aligned retirement income decisions.

At Mason, every retirement income conversation begins with exactly that alignment. Our sustainable withdrawal analysis is one of the tools that makes it possible.

Ready to evaluate whether your withdrawal strategy is built to last? Schedule a conversation with a Mason advisor >>

Thomas Pudner, CFA, CPA, CFP® is the Co‑Chief Investment Officer & Co‑Director of Research at Mason Investment Advisory Services, where he has led investment research and portfolio strategy for 20 years. His work on retirement income modeling has been recognized in The Wall Street Journal.