For decades, you’ve worked hard — saving diligently, planning carefully, and making intentional financial decisions — all with one goal in mind: enjoying retirement on your terms.
But once the paycheck stops, everything changes.
Your portfolio becomes your income source. It must support your lifestyle, cover everyday expenses, and last for the rest of your life. The question becomes:
Can your retirement plan withstand unexpected stress?
Market downturns. Rising healthcare costs. Inflation. Large one-time expenses. Life happens — and your portfolio must be prepared.
This is why stress testing your retirement plan is one of the most important steps before and during retirement.
Why Is a Stress Test Important?
Every financial plan begins with foundational assumptions:
- How much income will you need in retirement?
- How long will retirement last?
- How is your portfolio allocated?
- What legacy goals do you want to accomplish?
Income Planning
A common framework used in retirement planning is the income replacement ratio — the percentage of your current income you’ll need once you retire.
Many planners use 80% as a starting point. For example, if you currently earn $100,000 per year, you might estimate needing $80,000 annually in retirement.
However, that’s only a baseline. Travel, healthcare costs, supporting family members, or inflation can all increase that need over time.
Asset Allocation & Liquidity
Your investment mix also matters:
- What percentage is allocated to stocks versus bonds?
- How much is tied up in illiquid assets like real estate?
- Do you have accessible reserves for emergencies?
A portfolio that looks strong on paper may struggle if funds aren’t accessible when needed.
Legacy & Long-Term Goals
Retirement planning isn’t just about spending — it’s also about purpose.
- Do you want to leave assets to children or grandchildren?
- Are charitable gifts important to you?
- Will you contribute toward education costs?
These goals must be incorporated into the stress test to ensure your plan supports both your lifestyle and your legacy.
What Is a Retirement Stress Test?
A stress test evaluates how your portfolio performs under a wide range of potential market conditions.
Advisors often use a Monte Carlo simulation, which runs your plan through hundreds — sometimes thousands — of hypothetical market scenarios. These simulations account for varying returns, volatility, inflation, and withdrawal rates.
The outcome is typically expressed as a “probability of success,” shown as a percentage between 0% and 100%.
It’s important to understand:
- A high probability does not guarantee success.
- A lower probability does not mean failure is inevitable.
Instead, the results reveal how flexible your plan is — and what adjustments may improve your outcomes.
What Stress Testing Really Reveals
Stress testing highlights:
- Whether your withdrawal rate is sustainable
- If your asset allocation aligns with your risk tolerance
- How market downturns early in retirement could impact longevity
- Where adjustments may strengthen your plan
It allows you to proactively make changes — adjusting spending, reallocating investments, or modifying legacy goals — before a crisis forces your hand.
And it’s not a one-time exercise.
Stress testing should be reviewed regularly, especially as markets shift, laws change, or personal circumstances evolve.
Working with an advisor adds perspective and discipline to the process. An experienced advisor can identify blind spots, evaluate assumptions, and ensure your strategy remains aligned with your long-term goals.
Retirement planning is dynamic — not static. Ongoing review helps reduce the risk of running out of money or overlooking priorities that matter most to you.
If you’re preparing for retirement — or already retired — and want confidence that your plan can withstand life’s uncertainties, we would be honored to help you evaluate and strengthen your strategy.
Your retirement should be resilient, flexible, and built to last.
Bibliography
Charles Schwab. (2025, November 14). Stress testing your retirement plan. https://www.schwab.com/learn/story/stress-testing-your-retirement-plan
OneAscent Financial Services, LLC (“OAFS”), d/b/a The Cornerstone Financial Group, is a registered investment adviser with the United States Securities and Exchange Commission. OAFS does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by OAFS or any unaffiliated third party. OAFS is neither an attorney nor accountant, and no portion of the presented content should be interpreted as legal, accounting, or tax advice. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.