Publications
Publications
- January 2021
- HBS Case Collection
The FIRE Savings Calculator
By: Michael Parzen and Paul J. Hamilton
Abstract
This case follows Carol Muñoz, a member of the Financial Independence, Retire Early (FIRE) lifestyle movement. At the age of 45, Carol is considering retiring and living off the $1 million she has accumulated. Using Monte Carlo simulation, Carol forecasts the probabiliy her savings will last until age 80 depending on how her money is split over different financial instruments (stocks, bonds, etc.). Throughout the case, she runs the simulations under different scenarios and parameters. This allows students to explore uncertainty, probability distributions, statistical simulations, and the risk-return tradeoff and how it affects capital preservation and growth. The case is accompanied by a Jupyter notebook that allows students to work through Carol's analyses in the R statistical programming language.
Keywords
Analysis; Forecasting and Prediction; Financial Strategy; Investment Portfolio; Investment Return; Personal Finance; Saving; Risk and Uncertainty; Diversification; Theory; Financial Services Industry
Citation
Parzen, Michael, and Paul J. Hamilton. "The FIRE Savings Calculator." Harvard Business School Case 621-087, January 2021.