PT  - JOURNAL ARTICLE
AU  - John M. Mulvey
AU  - Han Hao
TI  - Setting Realistic Goals for Personal Retirement Planning via Micro–Macro Analyses
AID  - 10.3905/jor.2020.1.076
DP  - 2020 Oct 31
TA  - The Journal of Retirement
PG  - 23--38
VI  - 8
IP  - 2
4099  - https://pm-research.com/content/8/2/23.short
4100  - https://pm-research.com/content/8/2/23.full
AB  - 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 securityKey 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.