Modern Retirement Theory: Reaching Client Goals in Every Market

4 Pages Posted: 6 Nov 2019

See all articles by Jason Branning

Jason Branning

Modern Retirement Theory

M. Ray Grubbs

affiliation not provided to SSRN

Date Written: December 1, 2009


In contract to rational utility theory, prospect theory has shown individuals to be loss averse. Loss aversion and emotion often clouds an individual's financial decision-making. This paper offers an a priori framework approach to guide client's decision processes for individual retirement planning.

The primary concepts of modern retirement theory (MRT) that individual financial plan be established on the basis of two individually unknowable facts: longevity and conditions within longevity. These facts are both unknown and unknowable in individual client terms. Advisors and planners can build more robust plans that balance work around these two concerns to provide retirees peace of mind through a liability matching process displayed in the MRT pyramid. The image of a hierarchical pyramid show the prioritization for the individual to offset individual retirement risks in an unknowable context. Four conceptual funds that can be used to offset the individually unknowable are: Base Fund, Contingency Fund, Discretionary Fund, and Legacy Fund.

Keywords: Modern Portfolio Theory, Behavioral Finance, Retirement Planning, Prospect Theory, Modern Retirement Theory

Suggested Citation

Branning, Jason and Grubbs, Michael, Modern Retirement Theory: Reaching Client Goals in Every Market (December 1, 2009). Available at SSRN: or

Jason Branning (Contact Author)

Modern Retirement Theory ( email )

P.O. Box 2908
Ridgeland, MS 39158
United States


Michael Grubbs

affiliation not provided to SSRN

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