Short answer
A stress test is most useful when it makes the assumptions visible. This example keeps the return set constant and changes only its order, so the difference is not hidden behind a different average return.
Illustrative scenario
Use this page when you want a broad retirement portfolio check rather than a single withdrawal-rate rule. The output is a scenario comparison, not a probability of success. The example below uses a starting balance of $1,000,000, a first-year withdrawal of $40,000, 2.0% annual inflation, and 30 annual returns. The figures are illustrative and use no fees or taxes.
| Scenario | Ending balance | Status | Total withdrawn |
|---|---|---|---|
| Bad returns early | $0 | Depletes in year 14 | $615,258 |
| Entered order | $679,670 | Survives all 30 modeled years | $1,622,723 |
| Good returns early | $2,985,613 | Survives all 30 modeled years | $1,622,723 |
The bad-first and good-first rows use the same return set. Only the order changes. In this example the ending-balance gap is $2,985,613, which demonstrates why an average return alone does not describe a withdrawal portfolio's path.
First five annual returns in each scenario
| Year | Bad early | Entered order | Good early |
|---|---|---|---|
| 1 | -18.0% | -12.0% | +22.0% |
| 2 | -12.0% | +8.0% | +20.0% |
| 3 | -10.0% | +15.0% | +18.0% |
| 4 | -8.0% | -5.0% | +16.0% |
| 5 | -6.0% | +10.0% | +15.0% |
Withdrawals are applied at the beginning of each year, then increased by inflation for the next year. If a requested withdrawal exceeds the available balance, the scenario is marked as depleted in that year.
Questions about this scenario
What does a retirement portfolio stress test show?
It shows how an assumed balance, withdrawal, inflation rate, and return sequence interact. This Guardfolio example compares the same returns in bad-first, entered, and good-first order.
Is a retirement stress test the same as a Monte Carlo simulation?
No. A stress test uses explicit scenarios. Monte Carlo simulation samples many hypothetical paths and estimates a distribution of outcomes. This page uses explicit, inspectable assumptions instead of a probability model.
Run your own sequence
Use the full sequence-of-returns risk calculator to change the balance, withdrawal, inflation, and annual returns. Guardfolio's other tools cover concentration, volatility, rebalancing bands, and ETF overlap.