How a simulation runs

Your plan is replayed through real market history

Instead of assuming a fixed average return every year, Fikata replays your plan against actual sequences of US market returns and inflation from 1920 through 2024: the Depression, the inflation of the 1970s, the dot-com crash, 2008. A bad decade early in retirement does far more damage than the same decade late in it, and a single average return can’t show that. You may also choose datasets from 1950-2024, or 1971-2024.

Each run produces many paths, by default 100. Four methods decide how the paths are drawn:

History has only so many starting years, so the first three methods produce at most about 105 paths however many you ask for. Block Bootstrap can produce more. Randomness is seeded, so the same plan gives the same results each time it runs.

Where the data comes from. Every investment is modeled as the S&P 500 with dividends reinvested, whatever your real account actually holds, using Robert Shiller’s long-run market data. Inflation is the Consumer Price Index (CPI-U, not seasonally adjusted) from the Bureau of Labor Statistics, via the St. Louis Fed’s FRED database. Cash can earn a fixed interest rate you set, or track historical US short-term interest rates (MeasuringWorth). Property values can grow at a fixed rate you set, rise with inflation (CPI-U), or follow Shiller’s US home price index.

Inflation is paired with the returns. Each path carries the inflation that actually happened alongside its returns, and that inflation drives your expenses, Social Security cost-of-living adjustments, contribution limits and tax brackets on that path. One inflation assumption is used throughout, so they can’t silently drift apart.

What “success rate” means

A path succeeds if, in every year through the end of the plan, your income and accounts cover your expenses, debt payments and taxes. Property you’ve marked as available to sell can be sold to cover these expenses, if needed. The simulation runs until both you and your spouse or partner reaches their life expectancy. Your success rate is the share of paths that succeed: 85% means that in 85 of 100 historical sequences, the money lasted.

A success rate is not a prediction of the future. It tells you how your plan would have fared across the history it was tested on.

Every number is visible

Each path records dozens of figures for every year, plus detail for every account, property, debt, income and expense: income by type, taxes by kind, deductions, contributions, withdrawals, conversions, and account balances. If a result surprises you, you can open any path and any year and see what produced it. Results are exportable to CSV. If you think you see an error, let us know, we would be happy to take a look at it.

Where your money goes when you have extra

You don’t have to tell Fikata how much to put in each account. Each year, on every path, it takes the cash you have left after expenses and directs it down a savings ladder, in this order:

1. Keep a $1,000 cash buffer in checking or savings
2. Contribute enough to a workplace plan (401(k), 403(b) or 457(b)) to get the full employer match, where there is one
3. Pay down debt at 10% APR or more, highest rate first, such as a credit card at 20%
4. Build an emergency fund of a flat $50,000 (in today’s dollars) in savings or cash accounts. It isn’t sized from your expenses.
5. Contribute to an HSA, if you’re eligible, up to its annual limit
6. Contribute to retirement accounts up to their annual limits: workplace plans (401(k), 403(b) and 457(b)) first, then IRAs. Where you have both a traditional and a Roth version, the traditional account is filled first.
7. Pay down debt at 4% to 10% APR, including extra mortgage payments. Debt below 4% is paid on schedule.
8. Invest the rest in taxable accounts

Contribution limits, including catch-up contributions, rise with inflation on each path. The ladder is recalculated every year, so it adapts when income rises, a mortgage is paid off, catch-up eligibility begins, or a What-if changes your plan. 529 college savings plans aren’t on the ladder, so spare cash never goes into them.

Which way this pushes your results: the ladder assumes every spare dollar is saved. Real households usually let some of it drift into spending. If yours does, your plan will look somewhat better than reality.

When you need money

When expenses exceed income, Fikata draws from your accounts. By default it uses taxable accounts first, then tax-deferred accounts such as traditional 401(k)s and IRAs, then Roth accounts. Optional settings let it:

• Cap traditional withdrawals at the top of a tax bracket you choose (10%, 12%, 22% or 24%), drawing anything beyond that from other accounts. If the cap would leave you short in a year, it’s lifted for that year.
• Convert to Roth up to a bracket, with conversions capped at what your taxable accounts can pay the tax on

Both are off by default. Conversions stop at your required minimum distribution (RMD) age. Required minimum distributions start at 73 if you were born 1951–1959 and at 75 if you were born in 1960 or later (SECURE 2.0).

Use bracket filling with care. Capping traditional withdrawals at a bracket shifts spending onto your Roth. That spends your most tax-advantaged money first, while the traditional balance keeps growing into larger required distributions later. In our testing, with high assumed returns it can produce more lifetime tax, not less.

What-if and Optimize

What-if changes one or more inputs (retire two years later, sell the rental at 65) and reruns the plan. Optimize searches for the best plan given a goal you choose: retire as early as possible, or end with the most wealth. It only considers plans whose success rate stays above a floor you set (85% by default). Results can be applied to your current plan or saved as a new one.