Catch the dream of financial independence - A study about how you can impact your retirement saving and reach your future financial goal

Abstract: This paper takes off in the rapidly growing fields of financial independence and financial literacy. We develop a model focusing on reaching financial independence during retirement and mitigate financial decision making for financially illiterate. The model is based on theoretical research within financial literacy, economic life-cycle and safe withdrawal rates. To ensure qualified monthly saving recommendations, we perform Monte Carlo simulations in a solid test section. The results show that it is important to consider volatility in asset returns, a well-known financial phenomenon that is ignored by most publicly accessible models. Moreover, the model shows that the factors early start of saving, postponement of retirement and investing saved capital can substantially improve retirement wealth.