Episode 274: The Pitfalls of Retirement Calculators and Being Unrealistically Conservative, AI Musings And Portfolio Reviews As Of July 7. 2023
Risk Parity Radio
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The Probability Effect and the Sequence of Returns Risk
Frank: I'm about to reach my financial independence number and I'm spending lots of time using the portfolio visualizers Monte Carlo simulator. Every time I think I'm there, I activate the option to simulate the sequence of returns risk. That one where you can pick the first x years of retirement that would be the worst in terms of market return. And the results are so worrisome that I just keep working a year more. Will I need to work for 10 more years to compensate for the worst 10 years that could happen? Is that the only safe answer? Keep in mind I'm a very, very risk averse investor who has a 50% stock, 30% treasuries, 20
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