Component analysis #2 - the lifecycle

This is my second toe-dip into Milevsky's "Retirement Recipes in R," (RinR) a text book designed for finance and econ undergrad and grad programs with students that go after this kind of stuff but it could just as easily be for you or me (did I brag about my acknowledgement in the book yet? heh). As in my last post, Prof M serves up what it took me months or years to figure out in thousands of lines of code but he does it in just a line or two.  Here is an example.  He provides a simple function in section 3, that builds on a couple others in sections 1->2, one of which I profiled before, in order to estimate the optimal level of financial capital over a lifecycle.  Let's say we have the following:

Stepping into simple component analysis

In a recent post (My Retirement-Finance-Model "Topography" Strawman) I laid out what I thought was a reasonable framework for viewing the concept of retirement finance modeling. I am sure it is actually more complex than this but I wanted a simple way to think about it. It looked like this:

Training differences between me and my younger self

I get teased because I sometimes say I'm old. More chastised than teased, really. That's because me and my interlocutors both know I'm a pretty lean and cut "oldster" that is not really all that old. I mean, I do turn 63 in a couple months which in Twitter years is what? 400? That's a joke but it is true that I am not 25 any more. In my teens and 20s I trained very hard. I was a competitive swimmer, training up to 15k meters in the summer. I also lifted. Post swimming career, I lifted pretty hard. The goal then was to try to max out my shape and size and build max strength. You know, girls and all.  But my goals and body, like everything, have changed. You can't step into the same river twice (note the blog name...). I thought I'd bullet out some of the differences between age 25 and 63 that I see in my own program. I have done exactly zero research into physiology to back up my adjustments but I am comfortable with my mods. There are some legit guys on Twitter I follow in this area but I have not listed them here.  In no particular order, with no particular emphasis or "weighting:"

My Retirement-Finance-Model "Topography" Strawman

A model is best used as a decision-support tool rather than as a return-prediction tool.

- Patrick Collins 

I'll freely admit that the following figure might be naïve or reductive or reflect my biases but I thought I'd take it out for a trial run. Over 10 years of doing this kind of stuff, I might say -- for myself anyway -- that retirement finance models can break down into the kind of dimensionality I see in Fig 1...if we squint our eyes and don't look too close: