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Abstract
The vulnerability of individuals planning for retirement has been growing as a result of the conversion from defined-benefit plans to defined-contribution plans, the steady increase in life longevity, and the uncertainty of asset returns under an ever-changing global environment. A serious problem is the lack of appropriate planning for retirement. How much should an individual in the United States save beyond the Social Security tax to maintain a reasonable lifestyle after retirement?
The article designs a framework to facilitate the process of setting realistic goals for retirement planning, featuring the concept of agent-based simulations. Focusing on policy-rule-based investment strategies, the simulation framework includes multiple investable asset categories and explores dynamic allocation based on the investor’s age, current salary, and Social Security accumulation situation. Empirical results demonstrate a stylized application of the planning framework.
TOPICS: Long-term/retirement investing, pension funds, portfolio management, retirement, Social Security
Key Findings
• Demonstrates the advantages of agent-based simulation models for addressing the survivability of pension plans.
• Compares dynamic and adaptive strategies for integrating saving and investment decisions.
• Provides a clear example of goal-based investing for individuals and for institutions such as the US Social Security System.
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Don’t have access? Click here to request a demo
Alternatively, Call a member of the team to discuss membership options
US and Overseas: +1 646-931-9045
UK: 0207 139 1600