Methodology: How Praxion Models Retirement Uncertainty

Overview

Praxion is retirement planning software — not an investment manager, broker, or financial advisor.

You provide information about your retirement savings, spending goals, retirement age, Social Security expectations, and other planning assumptions. Praxion then projects how your retirement plan may evolve under different market and tax scenarios.

The platform combines two complementary views:

Deterministic Projection

A year-by-year retirement projection showing:

• Account balances
• Withdrawals
• Taxes
• Social Security income
• Required minimum distributions (RMDs)
• Medicare IRMAA impacts
• Estate value projections

Monte Carlo Simulation

A probabilistic analysis that evaluates your plan across thousands of possible market environments rather than relying on a single average-return assumption.

Together, these views help answer two different questions:

• What does my plan look like under expected assumptions?
• How resilient is my plan if markets, inflation, or retirement timing don't unfold as expected?

What Makes Praxion Different

Many retirement calculators focus on a single question:

"Can I retire?"

Praxion is designed to answer a more useful question:

"Which decisions have the greatest impact on my retirement?"

The platform evaluates decisions such as:

• Roth conversions
• Social Security claiming strategies
• Withdrawal sequencing
• Tax-aware retirement income planning
• IRMAA management
• Required minimum distribution planning

Rather than simply projecting balances, Praxion helps identify the trade-offs behind retirement decisions and estimate their potential impact over time.

How the Projection Engine Works

Retirement planning is fundamentally an exercise in uncertainty.

Future investment returns, inflation, tax law, healthcare costs, and longevity are all unknowable. Because of that, Praxion does not attempt to predict a single future outcome.

Instead, the platform evaluates how a retirement plan behaves across a wide range of possible conditions.

Each simulation incorporates:

• Market variability
• Inflation uncertainty
• Tax law as currently written
• Retirement spending assumptions
• Longevity assumptions
• Account-specific withdrawal rules

The result is a range of possible outcomes rather than a single forecast.

Monte Carlo Simulation

Traditional retirement calculators often assume a fixed annual return every year.

Real life does not work that way.

Markets rise and fall. Inflation changes. Early retirement market declines can have a very different impact than declines later in retirement.

To account for this uncertainty, Praxion runs Monte Carlo simulations that generate many possible future market paths.

The simulations are designed to evaluate:

• Market volatility
• Inflation uncertainty
• Sequence-of-returns risk
• Longevity risk
• Portfolio sustainability

Sequence-of-returns risk is particularly important during retirement. Poor market performance during the first years of retirement can have a disproportionate impact because withdrawals occur while portfolio balances are under pressure.

Monte Carlo analysis helps reveal risks that may not be visible in a simple average-return projection.

Tax Modeling

Taxes are often one of the largest expenses retirees face.

Praxion models retirement income under current federal tax rules and evaluates how different planning decisions affect lifetime taxes.

The engine incorporates:

• Federal income tax brackets
• Standard deductions
• Capital gains tax treatment
• Social Security taxation
• Roth conversions
• Required minimum distributions
• Medicare IRMAA thresholds

Because taxes interact with retirement income decisions, the platform evaluates taxes as part of the overall retirement strategy rather than treating them as a separate calculation.

For example, a Roth conversion may reduce future taxes but increase taxes in the current year. Similarly, delaying Social Security may create opportunities for lower-tax retirement income planning before benefits begin.

Praxion evaluates these trade-offs over the entire retirement horizon.

Withdrawal Strategy Analysis

The order in which retirement assets are withdrawn can significantly affect lifetime tax outcomes.

Praxion evaluates how withdrawals from:

• Taxable accounts
• Traditional IRAs and 401(k)s
• Roth accounts

may influence taxes, Medicare premiums, and portfolio longevity.

By comparing multiple withdrawal approaches under consistent assumptions, the platform helps identify strategies that may improve after-tax retirement outcomes.

Understanding Success Rates

A retirement success rate is not a prediction.

When Praxion reports that a plan succeeds in a certain percentage of simulations, it means that the plan remained solvent through the planning horizon under that percentage of modeled scenarios.

For example:

• A 90% success rate does not mean you have a 90% chance of retiring successfully.
• It means the plan remained sustainable in 90% of the modeled environments.

The value of the analysis comes from understanding where risk appears and what decisions might improve the outcome.

Two plans may have identical success rates while facing very different risks.

One may be vulnerable to early-retirement market declines. Another may be vulnerable primarily to longevity risk decades later.

Understanding those differences often matters more than the headline percentage itself.

How Accurate Are These Projections?

No retirement model can predict the future.

Future investment returns, inflation rates, tax laws, healthcare costs, and personal decisions are inherently uncertain.

Praxion should be viewed as a decision-support tool rather than a prediction engine.

The goal is not to forecast exact account balances decades in advance.

The goal is to compare strategies under consistent assumptions so you can make more informed retirement decisions today.

What Praxion Does Not Model

Transparency includes acknowledging limitations.

The platform currently does not fully model:

State Tax Systems

Federal tax rules are modeled. State income taxes and state estate taxes are not comprehensively incorporated because rules vary significantly across jurisdictions.

Individual Investment Holdings

Praxion models portfolios at a planning level and does not attempt to track every fund expense ratio, turnover pattern, or security-level tax lot.

Long-Term Care Events

The platform does not predict major healthcare events, long-term care needs, or other highly individualized medical expenses.

Behavioral Decisions

The engine assumes the plan is followed as modeled.

It cannot predict future behavioral decisions such as changing withdrawal rates during market downturns or altering retirement timelines.

Future Legislative Changes

Projections are based on current law. Future tax legislation, Medicare rules, Social Security changes, or retirement account regulations may materially affect results.

Specialized Compensation Structures

Complex stock compensation, concentrated equity positions, deferred compensation plans, and similar situations may require additional professional analysis beyond the scope of the model.

Data & Security

Praxion is a planning platform, not an account aggregation service.

The platform does not require bank credentials, brokerage logins, or retirement-account access to generate projections.

Your retirement plan is built from information you provide directly.

We do not sell personal financial information, refer users to advisors for compensation, or monetize retirement data through advertising.

AI-generated explanations within the platform are based on the underlying retirement model. The AI explains the results produced by the engine; it does not independently create financial projections or override the underlying calculations.