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Using Monte Carlo Methods for Retirement Simulations

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  • Aditya Gupta
  • Vijay K. Tayal

Abstract

Retirement prediction helps individuals and institutions make informed financial, lifestyle, and workforce decisions based on estimated retirement portfolios. This paper attempts to predict retirement using Monte Carlo simulations, allowing one to probabilistically account for a range of possibilities. The authors propose a model to predict the values of the investment accounts IRA and 401(k) through the simulation of inflation rates, interest rates, and other pertinent factors. They provide a user case study to discuss the implications of the proposed model.

Suggested Citation

  • Aditya Gupta & Vijay K. Tayal, 2023. "Using Monte Carlo Methods for Retirement Simulations," Papers 2306.16563, arXiv.org, revised Nov 2023.
    • Handle: RePEc:arx:papers:2306.16563
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    References listed on IDEAS

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    1. Pollet, Joshua M. & Wilson, Mungo, 2010. "Average correlation and stock market returns," Journal of Financial Economics, Elsevier, vol. 96(3), pages 364-380, June.
    2. Fernando Alvarez & Robert E. Lucas & Warren E. Weber, 2001. "Interest Rates and Inflation," American Economic Review, American Economic Association, vol. 91(2), pages 219-225, May.
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