How longevity can factor into a Monte Carlo analysis

03/25/2012 | Nerd's Eye View blog

Financial planners who employ Monte Carlo analysis might overestimate their clients' longevity, Michael Kitces writes. Planners often choose plans that have a low risk of failure over a certain time period, such as 30 years. However, for many clients, there is only a small likelihood they will live that long. The result is that planners may craft overly conservative retirement plans in some cases.

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