When you run MaxiFi's Monte Carlo Risk Analysis, MaxiFi uses your specified investment strategy and spending behavior, determined by your assumed safe rates of return, to produce hundreds of possible future living-standard trajectories. To see how it works, assume you are age 30 and could live to 100. MaxiFi calculates your household's total discretionary spending and per-person living standard assuming you’ll earn the safe real rates of return entered under Settings and Assumptions. It then consults your investment strategies to find out what assets you’ll be holding at age 30.

Next it draws, at random, real rates of return on these asset holdings. It does so taking into account historical return data, specifically how your age-30 assets have done in the past and the historic correlations between the returns on your age-30 assets. Based on your randomly drawn returns, it determines what your regular and retirement asset positions will be at age 31 and makes the same calculations, but starting at age 31. It continues in this manner until you are age 100. To build your next living-standard trajectory, the program returns to your age 30 and repeats the entire process again.

If you set higher safe rates of return for your regular and retirement account assets, the program will have you spend more at any point in time. This more aggressive spending behavior leads to more spending in the short run, but potentially far less spending in the long run. Setting lower safe rates of return makes you spend more cautiously. This entails spending less in the short run, but potentially more in the long-run than would otherwise be the case.