Projecting Retirement Income by Running Portfolios over Historical Periods

Everett, Michael D.; Anthony, Murray S.
April 2002
Journal of Financial Planning;Apr2002, Vol. 15 Issue 4, p82
Academic Journal
Most of today's retirement projection models require users to make arbitrary and difficult assumptions about future nominal asset returns and inflation rates. To address these limitations, the authors developed a retirement income projection model that will run an individual's portfolio over different historical periods to generate the actual income they would have received in that period based on the real, inflation-adjusted returns for different asset classes. The authors applied the model to a professional woman's retirement portfolio to provide a series of trial runs with different incomes for different periods and portfolios, from which they could develop subjective probabilities of success and failure.


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