How Retirees Can Lose as the Gamification of Monte Carlo Analysis Proliferates

Feb 23, 2022

Barron’s published a great article in which Jeff Brown and Income Lab co-founder Johnny Poulsen argue that gamification of Monte Carlo probability of success results “may be creating misdirected incentives in retirement planning.” Here a few of the main points:

 

  • Gamifying toward a 100% probability of success means restricting income—and ultimately standard of living—to accommodate a worst-case scenario that is (a) highly unlikely to occur and (b) could be better managed with minor changes in spending habits along the way.
  • Instead of relying on oversimplified and gamified probability of success, advisors should consider using retirement planning tools that help individuals arrive at realistic income levels and adjustment plans.

 

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