Monte Carlo and Conservative Spending
I am not clear on what the Monte Carlo simulations are estimating when I use the Conservative Spending option. Can someone explain, perhaps by taking one simulation for one year, and indicating what assumptions are used to generate the living standard and real asset income? For example, is asset income generated assuming the real rate of return (which appears to be the case) or a zero real rate (which is used in the non-Monte Carlo portion of the PDF report)? Similarly, if spending is based on a zero rate of return on assets, how is this determined when the actual simulation uses real rates of return?