What is Aftcasting?

Luck is the second-most important factor for retirement planning; second only to withdrawal rate. Good luck can give you lifelong income, bad luck can deplete your portfolio very fast. It creates the perils of the sequence of returns and the sequence of inflation.

How can you visualize luck? This is where aftcasting comes in.

Aftcasting uses the actual market history, including growth rate and inflation, as they exactly happened in history. It reflects the actual sequence of events, the actual sequence of returns (stocks, interest rates, and inflation), AND the actual correlation between stocks, interest rates, and inflation, actual volatility, and actual black swan events exactly as they occurred since 1900. Now, you can see the worst-case situations and see what can go wrong, instead of assuming average growth rates or inflation. Unlike simulators, it shows not only the impact of random but also fractal events of the past.

To help you with your planning, I have three tools for you: 1. My aftcast retirement calculator (ORC), 2. My book, "Unveiling the Retirement Myth", 3. My courses.


1. Otar Retirement Calculator (ORC):

Click here to order

Free trial: Click here to download. It has everything except the current age is fixed at 55.

2. Unveiling the Retirement Myth:

Order "Unveiling the Retirement Myth", my 525-page book about retirement income planning based on non-Gaussian philosophy, including numerous worked examples. The paperback version is sold out; only the pdf version is available to purchase. Discussion forum: Bogleheads. A comprehensive review by Steve Thorpe. You can also order the kindle version at Amazon

3. Advanced Retirement Income Planning:

I have one for 8-hour and another one for 2.5 hours of CE credits. You can also order the kindle and paperback version at Amazon.

My Philosophy: 

While I agree whole-heartedly that past performance does not necessarily indicate future performance, designing a retirement plan that includes the black swan situations of the past, can prepare you better for a successful retirement. 


Over the next ten years, over 80 million North Americans are hoping to retire. 

We have successfully landed robots on Mars and observed their amazing findings. We have successfully discovered cures for diseases. We have found solutions to numerous problems.

Yet our financial planning community still does not have the tools to answer realistically some of the most basic questions:

The answers to these questions are one click away!


No More Guessing!

When we use a standard retirement calculator, we guess average future growth rates and inflation. We plug in these guesses together with some basic personal information into a retirement calculator. We push the "calculate" button and get a projection of our retirement finances. 


Did you know that 80% to 90% of the time, these standard retirement plans will fail?


Take for example, a retiree who has one million dollars in his investment portfolio at the beginning of his retirement. He takes out $60,000 annually, indexed to inflation.  Assume his portfolio grows 8% and inflation is 3.5% per year.

In the chart below, the red line shows the outcome from a standard retirement calculator. It shows the portfolio value (the vertical scale) over time (the horizontal scale). At first glance, it appears wonderful; the portfolio seems to last longer than 30 years. 

Now, calculate the portfolio value if this person were to start his retirement in any of the one-hundred years during the last century using actual market data and inflation. Assume a conservative asset mix - 60% fixed income and 40% equity. Each black line shows the portfolio value over time for retiring in a particular year since 1900.

Most portfolios expired well before the red line which is the projection of the standard retirement calculator.   


No More Gambling!

I am not talking about taking your life savings to a casino in Las Vegas or Monte Carlo. What I am talking about is a mathematical model called Monte Carlo simulation. Some people use this model to forecast their retirement planning. While in theory it is based on probability of events, it does have several pitfalls:

When the Monte Carlo model is applied to retirement planning, these factors introduce serious flaws. 

Click to read my article on the flaws of current Monte Carlo Simulators. Some of the most sophisticated (and very expensive) MC simulators may simulate the volatility of returns better than others. However, what kills a retirement portfolio is not the VOLATILITY of returns, but it is the SEQUENCE  of returns. 

The Solution: Otar Retirement Calculator

I developed this model when I was writing my book "High Expectations and False Dreams - One Hundred Years of Market History Applied to Retirement Planning". My philosophy was very simple: Why guess? Why gamble? Why not use the actual, unadulterated historic market data? 

Neither the standard retirement calculator, nor the Monte Carlo simulation can account for the Time Value of Fluctuations. The Otar Retirement Calculator does! The Otar Retirement Calculator is based on actual market data. There are no assumptions of average growth or inflation. It gives you a range of portfolio asset projections that enables you to plan realistically for your retirement.  When you enter your personal financial data, the model calculates asset values and cash flow streams as if you retired in each of the years since 1900. The actual historic market data is applied to your specific financial situation. The results are summarized in this chart:

The table indicates the probability of portfolio depletion, as well as the outcome:





The green line shows the asset value of the top decile portfolio since 1900. That means only 10% of portfolios ever achieved or exceeded the asset values indicated by this green line. Do not use this for your retirement planning; it is there just to show you what can happen if you are lucky.

The blue line shows the asset value of the median of all portfolios since 1900. That means 50% of all portfolios had a lower value and 50% had a higher value than this line. And where it crosses the zero line (meaning no money left in the account), it means that half of the portfolios have already run out of money. Do not use the median for retirement planning because the odds are not on your side. 

However, the median line may have one useful application for estate planning: When I am estimating the tax liability or the insurance needs at the time of death, then I use the median. In addition, I use the green and blue lines for best and worst-case projections, respectively.

The red line shows the asset value of the bottom decile portfolio value since 1900. It indicates the portfolio value where 90% of portfolios survived and 10% are depleted. This is the line you need to use for retirement planning. That is because, at a 90% survival rate, the odds are on your side. If this line does not touch the zero line until your age of death, then you have a good retirement plan 


Income Carpet and Stress Test:

You can do a stress test on the income carpet and observe its effects:



Asset Classes:

The model works with four different asset classes: 

You can enter any percentage of each asset class (as long as the total is 100%) and see how this affects portfolio longevity. 


In addition, your home and other property can be included in the retirement planning with options to downsize, sell, rent when necessary.



S&P500 (since 1900), Canada SP/TSX (since 1919)


Asset Allocation Optimizer and Scenario Analysis: 

All you have to do is click on the "Optimize" button and seconds later, it is all in front of you.  You don't have to drop names of Nobel Prize winners and explain mysterious concepts like "efficient frontier". This optimization process will tell you exactly what the optimum equity/fixed income asset mix should be based on actual market history and the client's own cash flow picture: The lowest probability of depletion, the longest portfolio life, the largest residual amount of money in the portfolio. All by one click!


What you need to run the program?

The Otar Retirement Calculator is built on Microsoft Excel spreadsheet on a PC-type computer. You need Excel 2007 or newer to run it. 




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The information provided here for educational purposes only. It is not intended to replace your broker, your financial planner, your tax advisor or any other professional that you currently retain, or potentially intend to hire in the future. There is no implication, expressed or otherwise, that any of my research and findings will be beneficial or helpful to your financial success. A prudent investor should read any information about investments with skepticism, including any information on these web pages. None of the information, research, comment, or anything in these web pages reflect the position, philosophy, or the investment techniques of the magazines I write for or of any other organizations that I associate with.