Ep. 402: What’s Missing from Monte Carlo Simulations?

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This week on the Pete the Planner Show, Pete and Damian do a lightning round review of industries to see how they might fare in the recovery of our economy!

Remember: In the first six months of 2021, we’re going to make over five families’ financial lives, LIVE on the air! WE’RE GIVING AWAY FIVE FREE HEY MONEY, MEMBERSHIPS to walk with them across six months telling their stories about their struggles in personal finances. Check us out!

No time to listen? BUMMER. Here’s some of what happened and when:

Show Notes:


  • “Why does general public policy ignore our long term care need costs?”

    • Lisa: Probably because they’re a little scared of it. Studies show that 7/10 of us will need some kind of Long-term Care (LTC). And those costs can be enormous. We haven’t come to grips with this as a country.
    • We found that the average caregiver is a 49-year old woman. They may leave the workforce and not contribute to their own retirement and perhaps even draw down what they do have.
    • Public policy is woefully behind on addressing this under-investigated, growing, national problem.


  • There is a concept that financial advisors often use, it’s called a Monte Carlo simulation. It helps a person determine (based on a variety of variables) how much successful their retirement income strategy will be. But where does this fall apart?
    • Damian: Some Financial Planners may have missed this because it leans so heavily into chances of success; that one dimension.
    • If we talk about boarding a plane and you had an 80% chance of making it to your destination, would you get on? 
    • If there was an 8% chance of rain, you might not take an umbrella with you.
    • But if there’s an 8% chance of failure with a Monte Carlo sim, why are you okay with that?
    • We need to discuss the magnitude of the failure in the industry for a more accurate depiction of the entire retirement scenario.
    • Studies show there is a natural decrease in spending further into old age, but the sim tends to model the opposite: an increase in spending.

There’s so much more in the full show, including the laughs!  — click PLAY below for the full show.

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