The budget stress test simulator runs 1,000 Monte Carlo scenarios to show how your portfolio survives recession, job loss, and market crashes. Instead of a single "what if," you see the full distribution — from best-case recovery to worst-case depletion — so you can plan for financial resilience, not just average outcomes.
Portfolio & Stress Scenario Parameters
Portfolio Value Distribution — 1,000 Scenarios
Percentile Summary by Year
| Year | 90th Pct | Median | 10th Pct |
|---|
How to Use the Budget Stress Test Simulator
Most financial planning assumes normal market conditions. The budget stress test simulator asks a harder question: how does your portfolio survive the worst? Using 1,000 Monte Carlo simulations, it models the full spectrum from mild slowdown to severe crash with job loss, showing you the probability-weighted outcome range rather than a single optimistic projection.
Step 1: Enter Your Current Financial Snapshot
Enter your investable portfolio value (excluding home equity and emergency fund), monthly expenses, and monthly take-home income. The surplus (income minus expenses) becomes your normal savings rate — it reduces the pace of portfolio drawdown during non-stress periods. The emergency fund in months tells the simulator how many months of cash buffer you have before needing to touch investments.
Step 2: Choose Your Recession Scenario
Three built-in scenarios based on historical recessions: Mild (-20% market, 3-month job loss) models a brief correction. Moderate (-35% market, 6-month job loss) is based on the 2008-2009 Great Recession typical recovery. Severe (-50% market, 12-month job loss) models a prolonged crash similar to the 1929-1930 period. The simulation randomizes recession timing and exact drawdown within these bounds across 1,000 runs.
Reading the Percentile Bands
The chart shows three lines: the 90th percentile (lucky timing), median (typical outcome), and 10th percentile (unlucky timing). If the 10th percentile portfolio stays positive throughout the simulation period, your portfolio is highly resilient. If the 10th percentile hits zero, 10% of scenarios result in portfolio depletion — a risk worth planning for by increasing your emergency fund or reducing stock allocation.
What Actions Improve Survival Rate?
Three inputs have the biggest impact on survival rate: (1) Emergency fund — each additional month reduces portfolio liquidation during income gaps. (2) Monthly expense reduction — even 10-15% cuts dramatically improve survival. (3) Stock allocation — reducing from 100% to 70% stocks doesn't sacrifice much long-term return but significantly reduces the downside in severe scenarios. Run the simulation with different inputs to see which change makes the most difference for your situation.
FAQ
Is this budget stress test simulator free?
Yes, completely free with no signup required. All 1,000 Monte Carlo simulations run locally in your browser — your data is never sent to any server.
What is a Monte Carlo simulation for portfolio stress testing?
A Monte Carlo simulation runs thousands of randomized scenarios to show the range of possible outcomes. For portfolio stress testing, each simulation randomly chooses when the recession hits, how severe market drops are within the scenario range, and how long income recovery takes. The result is a probability distribution — not just one answer, but the full range from best to worst case.
What does 'portfolio survival rate' mean?
Portfolio survival rate is the percentage of Monte Carlo simulations where you still have money in your portfolio at the end of the simulation period. A 92% survival rate means 920 of 1,000 simulations ended with a positive portfolio. The 8% failure rate represents scenarios where job loss plus market decline depleted the portfolio before income resumed.
What are the built-in recession scenarios based on?
The mild scenario models a 20% market decline with 3 months job loss (similar to a brief 2001-style recession). Moderate models a 35% decline with 6 months loss (similar to 2009 recovery path). Severe models a 50% decline with 12 months loss (similar to 1929-1932 worst case). Recovery rates are based on historical average post-recession market performance.
How does the emergency fund factor in?
Your emergency fund covers living expenses when income drops to zero during job loss. The simulation tracks emergency fund depletion month-by-month. If you specify 6 months of expenses as your emergency fund, you have 6 months of cash reserves before needing to liquidate investments. The 'emergency fund lasts' stat shows how long it survives across simulations.
What does the stock allocation percentage do?
Stock allocation determines how much of your portfolio suffers market-rate losses during a recession. At 70% stocks, a 35% market crash reduces your portfolio by 24.5% (70% × 35%). The remaining 30% in bonds typically loses less (5-10%) and may even gain value in flight-to-safety scenarios.
How do I use this to improve my financial resilience?
Run the simulation with your current numbers, then adjust variables to see what would most improve your survival rate. Usually, the highest-impact levers are: increasing emergency fund from 3 to 6 months, reducing monthly expenses by 10-20%, and ensuring 20-30% bonds allocation to reduce stock volatility exposure.