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Comprehensive Financial Planning for a Sustainable Retirement†

Author

Listed:
  • Tahani Nabil

    (Associate Professor of Finance and Area Coordinator, School of Administrative Studies, York University)

  • Robinson Chris

    (Professor Emeritus of Finance and Senior Scholar, School of Administrative Studies, York University)

Abstract

We demonstrate a comprehensive approach to the dual problems of saving enough for retirement and determining how much saving is enough at retirement date, using a probabilistic (stochastic) model. Our model estimates the probability of success of a comprehensive plan that spans the life cycle. Retirement plans are riskier than the financial planners’ deterministic models show, using a simple case study as a comparative example. Variables the family can control for a successful retirement plan are the patterns of pre-retirement saving and retirement consumption, the probability of running out of money in retirement that the family will accept, and the age of retirement.

Suggested Citation

Handle: RePEc:vrs:finprj:v:10:y:2024:i:1:p:20:n:1002
DOI: 10.2478/fprj-2024-0002
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File URL: https://doi.org/10.2478/fprj-2024-0002
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More about this item

Keywords

comprehensive financial planning; sustainable retirement; probability of ruin; stochastic present value; stochastic future value;
All these keywords.

JEL classification:

  • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
  • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
  • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
  • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques

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