App 15n: Probability of retirement ruin (approx.)
Retirement & returns
Age x
65
Expected real return r
3%
Volatility σ (real)
0.08
Finances (real)
Spending B / year
4,000
Wealth K at retirement
100,000
Mortality (Gompertz–Makeham)
Accidental λ
0
Modal age m
82.3
Dispersion b
11.4
Compute
Probability of retirement ruin:
11.65%
Mortality rate (λ
exp
):
0.0426
Median expected lifetime:
16.25 y
GM survival
Exponential survival (λ
exp
)
Median point
Waiting…