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Developing a Reasonable Spending Budget: Monte Carlo Modeling vs. the Actuarial Approach
Ken Steiner, FSA Retired
Oct. 9, 2019 "[D]eterministic models tend to provide specific outcomes, and Monte Carlo models tend to provide outcome ranges and probabilities of achieving specified objectives. Deterministic approaches also enable a user to consider more complicated calculations within the model.... [One] process under the Actuarial Approach involves periodic stress testing of assumptions to assess risks. This will generally involve more worst-case 'what-if' analysis than anticipated under a Monte Carlo model." MORE >> |
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