Percentile: what does that mean? | Timeline Help Centre

Summary

A percentile shows where a specific outcome ranks within a range of results.
Timeline uses percentiles to rank outcomes across historical and Monte Carlo scenarios.
The 0th percentile represents the worst outcome; the 100th percentile represents the best.
The 50th percentile is the median — half of outcomes are better and half are worse.
Timeline defaults to the 10th percentile to present a conservative, expectation-setting outcome.

Description

A percentile is a statistical measure that indicates how a value compares to the rest of a dataset.

In Timeline Planning, percentiles are used to help advisers interpret results generated from historical backtesting and Monte Carlo simulations.

When analysing a retirement strategy, Timeline may run hundreds or thousands of scenarios. For example:

If we run every 30-year rolling historical scenario from January 1900 to December 2018 using monthly investment returns and inflation data,
We generate 1,068 different scenarios.

Each scenario produces different outcomes — such as final legacy values or sustainable income levels.

To make this data meaningful, we:

Rank all outcomes from lowest to highest.
Assign each outcome a percentile ranking.

Understanding Percentile Rankings

0th percentile – The lowest outcome (worst-case scenario).
100th percentile – The highest outcome (best-case scenario).
50th percentile – The median outcome. Half of scenarios are better, half are worse.
20th percentile – An outcome in the bottom 20%. This means 80 out of 100 scenarios are better than this one.
10th percentile (Timeline default) – An outcome in the bottom 10%. This means 90 out of 100 scenarios are better, and only 9 out of 100 are worse.

Percentiles apply equally to:

Final legacy amounts
Income levels
Portfolio values at any point in time

Why Does Timeline Default to the 10th Percentile?

This is a deliberate product design decision focused on expectation management.

We know that clients tend to anchor on projected figures. If shown a median or optimistic outcome, they may internalise that number as “expected.”

By defaulting to the 10th percentile, Timeline presents:

A conservative estimate
A figure significantly below average
A result that has historically been exceeded 90% of the time

This helps advisers set prudent expectations and build resilient retirement strategies.

Of course, users can select any percentile:

0th percentile – Worst historical outcome
50th percentile – Median outcome
Higher percentiles – More optimistic scenarios

The choice depends on how you wish to frame risk and probability in client conversations.

Example

Imagine there are 20 people at your firm.

If you are the fourth tallest, you rank ahead of 16 out of 20 people.
That places you at the 80th percentile for height.
- You are taller than 79% of the group.
- Only 2 out of 10 people are taller than you.

If Linda is the tallest person in the firm, she is in the 100th percentile — no one is taller.

If Jim is the shortest, he sits at the 0th percentile — though you may choose not to phrase it that way to him.

Conclusion

Percentiles allow advisers to interpret complex scenario modelling in a clear and structured way.

Rather than focusing on a single projected number, Timeline ranks outcomes across hundreds or thousands of scenarios. This enables advisers to:

Understand downside risk
Frame client expectations appropriately
Select outcomes that match their risk communication style

By defaulting to the 10th percentile, Timeline supports prudent planning — ensuring strategies are designed to succeed across a wide range of historical conditions.