A monthly investment simulation is used to answer two very concrete questions: how much can your capital pay you each month, and what capital is needed to get 500 €, 1,000 € or 2,000 € supplementary income. The answer rarely depends on a single number. It combines the amount placed, the duration of the payment, the expected return, taxation, the level of risk accepted and the choice between a temporary or a lifetime pension.
The aim is therefore not to find a pension. « Magic », but compare several realistic scenarios. A good simulation helps to measure the difference betweengross incomeand onenet pensionbetween gradually consumed capital and capital that continues to work, or between a secure but low-paying investment and a more dynamic but volatile support.
Starting from the right calculation: capital, duration and target pension
The simplest calculation is to divide a capital by the number of months you want to consume it. Over 20 years, we reason over 240 months. A capital of 240,000 € In addition to yield and non-taxation, it would therefore be possible to pay 1 000 € per month for 20 years. This approach gives a first order of magnitude, but it remains voluntarily simplified.
Calculation of monthly pension
Temporary annuity: a capital that is consumed
In a temporary pension, you choose a duration, for example 10, 15, 20 or 25 years. The capital is then used to supplement your income over time. If the investment continues to yield a return, the pension can exceed a simple division of capital by the number of months. Conversely, if markets decline or fees are high, the amount available may decrease faster than expected.
This logic is suitable for people who want to finance a specific period of time: early retirement, transition to work, assistance to a relative, or income supplement up to a given age. However, it requires monitoring of thecapital remainingwith regularity, as each withdrawal reduces future room for manoeuvre.
Life annuity: a lifetime income
The lifetime pension works differently: the income is paid until the beneficiary dies. The amount depends in particular on the age at the time of conversion, the options chosen, the rate of withdrawal and the technical interest rate. For example, there are assumptions with a rate of interruption of 3% and a technical interest rate of 1.25%, but these parameters vary according to the contracts and conditions chosen.
The life annuity is mainly in response to a search forSecurity: do not exhaust its capital too soon. In return, it may reduce heritage flexibility, particularly if no option of reversion or guarantee is provided. The choice must therefore remain consistent with the need for income, but also with the protection of the spouse and possible transmission.
The parameters that really change the monthly amount
Two simulations with the same capital can produce very different results. This is why we must always look at the assumptions behind the figure displayed: annual yield, taxation, fees, duration, inflation and type of exit. A useful simulator is not limited to a monthly amount; It allows to modify these variables and compare deviations.
The rate of return: from 1% to 12%, the difference is considerable
Simulators often use several annual rate of return assumptions: 1%, 3%, 6% or 12%. These levels do not correspond to the same risk. A yield of 1% evokes a cautious approach, but often not protective of inflation. At 3%, the scenario becomes more balanced, depending on the media chosen. At 6%, the logic is generally more dynamic. At 12%, the projection becomes very ambitious and must be considered with caution.
The main reason for this is thatNet: net of fees, net of taxes if possible, and consistent with the duration. High performance over a year does not guarantee a stable annuity for 20 years. This is essential because too optimistic a simulation quickly distorts the expected level of income.
Compound interest before annuity
If you have not yet formed your capital, the savings phase counts as much as the pension phase. The initial capital, periodic savings, investment term and annual rate of return create a compound interest effect: the earnings themselves generate gains. This is particularly visible when the horizon is long, e.g. for a projection of additional income at age 67.
In concrete terms, starting earlier often reduces the monthly effort required. On the other hand, waiting forces either to invest more capital, to accept a lower pension, or to take more risk in seeking return. Therefore, duration plays a direct role in saving effort.
Taxation, inflation and net pension
An annuity displayed at 1,000 € per month is not always a pension actually available at 1000 €. Depending on the medium used, taxation may apply to earnings, withdrawals or annuities. PER and life insurance, for example, do not comply with the same tax logic. It is therefore necessary to distinguish between gross rent, net tax rent and net purchasing power pension after inflation.
Imagine your budget as a financial bubble: it must remain large enough to absorb fixed expenses, medical contingencies, work, family help or higher prices. Too optimistic a simulation gives the impression of solid comfort, but the slightest leak can weaken it. Adding a margin of safety, even a modest one, allows you not to build your entire retirement on a smooth figure but rarely conforms to real life.
Estimation table: what capital for which monthly pension?
The table below gives a simple reading, based on a 20-year capital consumption, i.e. 240 months, excluding yield, tax and non-cost. It does not replace a custom simulation, but it helps frame orders of magnitude before testing different rates of return.
| Monthly rent | Indicative capital over 20 years | Practical reading |
|---|---|---|
| 500 € per month | 120 000 € | Useful supplement for common or leisure expenses |
| 1 000 € per month | 240 000 € | Significant supplementary income at retirement |
| 2 000 € per month | 480 000 € | More demanding heritage objective |
| 5,000 € per month | 1 200 000 € | Decumulation strategy to be finely piloted |
With a positive return, the necessary capital may decrease, as part of the annuity is financed by interest. But it would be dangerous to calculate only on average performance. In the withdrawal phase, a bad market sequence at the beginning can weigh heavily on the life of the capital.
This is where the notion ofsafe withdrawal rate, or prudent withdrawal rate. It consists of not withdrawing too quickly to preserve capital over time. This is not a guarantee, but a useful benchmark to avoid turning an investment into a simple, mechanically empty current account.
Compare investments capable of producing an annuity
The choice of support influences both potential return, regularity of income, taxation, liquidity and risk level. A good monthly pension investment is not only the one that announces the best return; This is the one whose operation corresponds to your horizon and your tolerance to fluctuations.
| Placement | Main asset | Point of vigilance |
|---|---|---|
| Life insurance | Flexibility of scheduled buyouts and choice of media | Market-dependent rent if units of account |
| PER | Tool dedicated to retirement, possible exit to an annuity or capital as appropriate | More forced release frame before retirement |
| Rental property | Potential regular income and tangible assets | Rental, work, taxation and management |
| SCPI | Real estate mutualisation and potential income | Risk of falling shares and liquidity not guaranteed |
| Diversified financial portfolio | Modular decumulation and yield potential | Volatility and withdrawal discipline required |
Diversification often remains the most robust response. Combining a secure pocket for the first years of rent, a balanced medium-term pocket and a dynamic pocket to preserve purchasing power can reduce dependence on a single scenario. This distribution also limits the risk of having to sell at the wrong time.
Use a simulation before deciding
Simulation is not a prediction. It's a decision support tool. For it to be useful, assumptions must be made that are consistent with your situation: age, available capital, future payments, desired starting date, target income level, estimated taxes and need for transmission.
Test at least three scenarios
The first reflex is to compare a cautious scenario, a central scenario and a dynamic scenario. For example, you can test a yield at 1%, 3% and then 6%, and observe the effect on the monthly pension. The 12% scenario can be used to understand the power of performance, but it must not become the basis of a pension plan without risk analysis.
It is also useful to simulate a lower than objective pension and a higher pension. This reveals the necessary capital gap and allows for a balance between monthly comfort, duration of payment and preservation of assets. Differences are often more telling than a single average figure.
Check output options
Before choosing an investment, see if you can raise capital, an annuity, or a mixed solution. Capital outflow offers more freedom, but requires discipline. The rent secures a regular flow, but may limit transmission. Mixed exit may be relevant: one part to cover essential expenses, another part to maintain flexibility.
Finally, keep in mind that the results of a simulator are indicative. They must be used to ask the right questions: what net amount do I really need every month? What market decline can I handle? Do I need to protect my spouse? What part of my capital should I keep available? A well constructed simulation does not only give a figure; It clarifies a life strategy.