A NEW APPROACH TO BUILDING A SUSTAINABLE RETIREMENT PLAN USING PROVEN ACTUARIAL PRINCIPLES
By Kenneth Steiner
Essay Overview
This essay outlines a recommended actuarial financial planning approach that I believe is superior to other popularly followed methods, such as the 4 percent rule, in which withdrawing only that percentage from your
accounts will avoid depleting your savings, to the more complex Monte Carlo12 modeling techniques, which assesses the likelihood of meeting retirement goals, given a range of possible market outcomes.
12. Investopedia defines Monte Carlo Modeling or Simulation as “a planning technique used to calculate the percentage probability of specific scenarios based on set assumptions and standard deviations” (Cussen 2019).
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About the Author
Ken Steiner, Fellow of the Society of Actuaries, Retired advocates the use of basic actuarial and financial economic principles to help people make better financial decisions. Ken has been advocating the actuarial approach for determining reasonable spending budgets for over 10 years.