Risk Of VaR Model-based Retirement Planning

At present, population aging has become a universal problem around the world. According to the results of the study, by2040, China’s elderly population will reach380million. It will be more than the total population of the whole of Europe.In China, the elderly are usually supported by their children, with the average life expectancy increasing; one child to support their parents will become increasingly difficult.The principle of the national pension insurance is ’wide coverage, low-level’. Its purpose is to protect the basic livelihood of retirees, on the other hand, due to China’s enterprise annuity system has just started, many residents is difficult to get through this pathway retirement protection.The pension problem is related to many factors, is very complex. The pension problem is not a simple conclusion can be answered. Decentralized decision-making in a complex environment, the market mechanism often produce superior solutions than the plan for centralized decision-making mechanism.Since the reform and opening up, the people’s wealth is growing rapidly. Many people have the ability to invest. At the same time, China’s financial market environment has gradually standardized and improved.Given these circumstances, it is very important that individuals and families build up sufficient pension by investing during working.Firstly, establish a retirement planning model, followed by the introduction of VaR (Value at Risk) method to evaluate and compare the investment risk. Monte Carlo simulation method is in the calculation of VaR (Value at Risk).This article discusses the following five parts.The first part described the background, the significance, the Research ideas and the logical structure, so that the contents of the papers at a glance. The second part described the basic principles of retirement planning and of the status quo of the old-age security system. It tells us what are retirement planning, as well as the need for retirement planning theory.The third part, the main content is the exposition of the VaR model and application. And I introduced the concept of risk management as well as several traditional approaches for risk management.The fourth part, I analyzed the situation of the typical high-income urban residents in Sichuan family retirement planning. Then I use the VaR method to complete the risk assessment.The fifth part, according to the paper’s findings and the status of old-age security in China, I put forward countermeasures and suggestions.