Evan Simonoff

Some retirement experts voice questions about Monte Carlo’ s success rates and urge more spending optimism.

HO IS MORE AFRAID OF A 30- OR 40-YEAR REtirement, advisors or their clients? As trillions have piled up in retirement accounts, a growing body of research has suggested that many retirees are living below their means, even if the evidence is inconclusive.

Part of the reason may be the disconnect between the cautious capital market assumptions( CMA) that advisors are plugging into their Monte Carlo simulation models and the actual outsized returns clients are enjoying in the financial markets. Most of the giant asset management complexes that produce CMA models annually, including Vanguard, J. P. Morgan Asset Management and others, typically err on the conservative side. As returns have persistently exceeded long-term averages since the Great Recession, some asset managers have dialed back their projections, further reasoning that markets will eventually revert to the mean.

Meanwhile, the great baby boomer retirement wave is now running at full throttle. Market strategist Ed Yardeni has attributed some of the surprising strength of the post-pandemic economy in recent years to spending by seniors in the early go-go years of retirement. Over the longer term, Treasury Secretary Scott Bessent has questioned the sustainability of an economy where the wealthiest 10 % of Americans account for 50 % of consumer spending. At the same time, clients are asking how the nation can keep running $ 2 trillion federal budget deficits with the economy at full employment and whether Social Security will be there for them in nine or 10 years.

The crosswinds of roaring financial markets and a looming federal govern-

12 | FINANCIAL ADVISOR MAGAZINE | APRIL 2025 WWW. FA-MAG. COM