Stress tests

Stress tests in the left menu shows how the open scenario holds up when something goes wrong. Each test changes one thing and reruns the same thousand market paths, so the difference from the normal score comes only from that change.

What could go wrong

The first line is the scenario as it is. Under it, each test shows:

• Probability of success with the test applied, and the Change from the normal score.
• Worst 10%: money runs out: the year the money runs out in the worst tenth of market paths.
• Median left at plan end: what’s left in a typical path.

The tests are a deep fall in the markets the year Bradley retires, two bad years in a row then, a decade of high inflation, lower returns every year, the single stock losing half its value, a long-term-care event, and each of you dying at a chosen age. The last line, without the advisor’s fee, is there for comparison. A short note under each test says exactly what it assumes.

When one of you dies, from the following year the planner gives the survivor the larger of the two Social Security benefits and the pension’s survivor payment, stops the French pension, moves the IRAs into the survivor’s name, files taxes as a single person, and lowers spending.

What you do to change the survivor tests:

1. Type an age in Bradley dies at or Reynald dies at.
2. Type the share of today’s spending the survivor would keep in Survivor’s spending, %. The SF home’s costs aren’t reduced.
3. Click outside the box. The two lines update.

Replaying market history

The second card runs the scenario through the real markets and inflation of every stretch of history long enough to cover the whole plan, starting in 1928. Each starting year is one replay: the plan’s first year gets that year’s markets, the next year the following year’s, and so on, with your current mix of stocks, bonds and cash.

• The large number is how many starting years the money lasted to the end of the plan.
• The chart has a bar for each starting year showing what was left at the end; a red ✕ marks a starting year where the money ran out. Point at a bar for the details.
• The hardest starting years lists the five worst, with the year the money ran out.

Keeping a test as a scenario

What you do to look at a test on the overview or compare it with other scenarios:

1. Click Save as scenario on the test’s line (or on a starting year in The hardest starting years).
2. The new scenario opens on the overview, with a note saying which test it carries.

The test stays applied every time that scenario is calculated, including on Compare scenarios and Cash flow & taxes. Delete the scenario when you no longer need it.