Part II. Assessing the Risks

The changing retirement perspective requires us to address the inherent risks, reevaluating our current skills and tools, as well as client needs, circumstances, and psychology, so that we can be more effective in our planning. These chapters review the approaches to retirement-income analysis, including Monte Carlo, stochastic modeling and discuss the psychological barriers to facing the issues that must be addressed in the planning process. Creative challenges to old and new ways of analyzing client risks abound here.

Mathew Greenwald

Matt integrates his academic background, extensive involvement in research, and practical experience to bring to the reader clear, concise concepts on difficult psychological issues immediately applicable to daily practice. Drawing from Peter Bernstein's Against the Gods: The Remarkable Story of Risk, Pascal's wager, and "central tendency" theory, for example, Matt relates the lessons to retirement planning and the necessity to consider not only the likelihood of living well past normal life expectancy or experiencing high inflation or a market downturn but also the consequences of each. As with many of the chapters in this volume, his advice confirms the guidance of other contributors—for example, MacGregor and Curtis on stress testing, Milevsky and Saltzman on the misperception of mortality, and Chen on longevity risk.

Jim C. Otar

Today, our professional literature focuses on what is generally considered the two anchors ...

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