Using Monte Carlo Methods for Retirement Simulations
Aditya Gupta, Vijay K. Tayal
TL;DR
This paper introduces a Monte Carlo simulation model to predict retirement savings outcomes by accounting for various economic factors, aiding better financial planning.
Contribution
It presents a novel probabilistic model for retirement prediction using Monte Carlo methods, incorporating inflation and interest rate simulations.
Findings
Effective modeling of retirement account growth
Probabilistic insights into retirement outcomes
Case study demonstrating practical application
Abstract
Retirement prediction helps individuals and institutions make informed financial, lifestyle, and workforce decisions based on estimated retirement portfolios. This paper attempts to predict retirement using Monte Carlo simulations, allowing one to probabilistically account for a range of possibilities. The authors propose a model to predict the values of the investment accounts IRA and 401(k) through the simulation of inflation rates, interest rates, and other pertinent factors. They provide a user case study to discuss the implications of the proposed model.
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Taxonomy
TopicsRetirement, Disability, and Employment · Insurance, Mortality, Demography, Risk Management · demographic modeling and climate adaptation