How is “Essentials met in the worst year” calculated?

We start by working out the level of expenses that are met by income or assets in a year divided by the target expenses for that year. 

For each year, we calculate this proportion for each of the 1,000 possible scenarios, order them from highest to lowest and take the bottom 5th percentile result, ie the 50th out of the 1,000 results. 

We then compare this 5th percentile figure across every year to find the lowest proportion across the plan term. This measures the potential downside for clients should their assets run out early.


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