calc_retirement_ruin: Calculating retirement ruin probability

In R4GoodPersonalFinances: Make Better Financial Decisions

Calculating retirement ruin probability

Description

Calculating retirement ruin probability

Usage

calc_retirement_ruin(
  portfolio_return_mean,
  portfolio_return_sd,
  age,
  gompertz_mode,
  gompertz_dispersion,
  portfolio_value,
  monthly_spendings,
  yearly_spendings = 12 * monthly_spendings,
  spending_rate = yearly_spendings/portfolio_value
)

Arguments

portfolio_return_mean	A numeric. Mean of portfolio returns.
portfolio_return_sd	A numeric. Standard deviation of portfolio returns.
age	A numeric. Current age.
gompertz_mode	A numeric. Gompertz mode.
gompertz_dispersion	A numeric. Gompertz dispersion.
portfolio_value	A numeric. Initial portfolio value.
monthly_spendings	A numeric. Monthly spendings.
yearly_spendings	A numeric. Yearly spendings.
spending_rate	A numeric. Spending rate (initial withdrawal rate).

Value

A numeric. The probability of retirement ruin (between 0 and 1), representing the likelihood of running out of money during retirement.

References

Milevsky, M.A. (2020). Retirement Income Recipes in R: From Ruin Probabilities to Intelligent Drawdowns. Use R! Series. \Sexpr[results=rd]{tools:::Rd_expr_doi("10.1007/978-3-030-51434-1")}.

Examples

calc_retirement_ruin(
  age                   = 65,
  gompertz_mode         = 88,
  gompertz_dispersion   = 10,
  portfolio_value       = 1000000,
  monthly_spendings     = 3000,  
  portfolio_return_mean = 0.02,
  portfolio_return_sd   = 0.15
)

R4GoodPersonalFinances documentation built on April 4, 2025, 1:48 a.m.