Monte Carlo reports show the results based on the spending behavior you choose in the Spending Behavior tab: aggressive, cautious, or conservative.

If you choose to spend aggressively (i.e., assume that you’ll always earn the average return on your portfolio) then these reports assume that you’ll spend all the extra money recommended in a great year and suffer through the down years. In real lived practice, a typical user might tend to save a little from those good years and use it in the bad years. So if you choose the “spend cautiously” option, the program assumes that you’ll spend in a way that assumes you’ll earn a real return (i.e., inflation adjusted) that is half way between the mean and zero. If you check the option to spend conservatively, the program assumes that you’ll spend in a way that assumes you’ll always earn a zero real return (i.e., merely keep pace with inflation) on your portfolios.

This set of options to adjust spending/draw down rates is what’s called expected utility maximization. It takes into account users’ risk aversion and natural tendency to adjust in midstream. But as shown in the aggressive spending option, users should see that basing their spending on expected average returns year after year in the manner described by the aggressive option will lead to a lot of downside living standard risk as they age if they invest in risky assets.