Title: Can Value at Risk Protect My $1.8M IRA Inheritance? Tagline: Can Value at Risk Protect My $1.8M IRA Inheritance? Problem: Helen, a 68-year-old widow, recently inherited a Traditional IRA worth $1.8 million. Overwhelmed and risk-averse, she wants to generate income to cover living expenses while preserving her capital. She's unsure how much of her portfolio to allocate to riskier assets like stocks and needs a way to quantify the potential downside before making investment decisions. She needs a clear picture of potential losses at different confidence levels to determine a safe withdrawal rate and asset allocation. Solution: Using the Value at Risk (VaR) Calculator, Helen can model potential losses on her hypothetical portfolio at different confidence intervals (e.g., 95% or 99%). By inputting asset allocations and historical data (or expected returns and volatilities) for each asset class, she can estimate the maximum expected loss over a specific time horizon (e.g., one month or one year). This allows her to understand the potential impact of market fluctuations on her IRA and make informed decisions about asset allocation and withdrawal strategies. By stress-testing her portfolio, Helen can then explore lower-risk options until she arrives at a comfortable risk-adjusted rate of return. ROI: By understanding the Value at Risk of her portfolio, Helen can adjust her asset allocation to reduce potential losses. For instance, she might shift a portion of her portfolio from stocks to bonds, reducing her VaR by 10%. This means a potential $180,000 decrease in maximum expected losses on her $1.8M portfolio at a 95% confidence level, allowing her to sleep soundly at night knowing her retirement nest egg is protected, while also taking an appropriately sized withdrawal rate of, say, 4% ($72,000 per year). Description: Worried about downside risk? Calculate your potential losses on a $1.8M IRA inheritance with our Value at Risk (VaR) Calculator. This tool helps retirees understand and manage investment risk for greater peace of mind. Category: Client Service