A retirement plan is built on a set of assumptions that can’t be validated until it’s too late. One key to successful retirement planning is carefully setting assumptions and revising them often.
Retirement calculators make it so easy. Pick a retirement date. Estimate your living expenses in retirement and choose an inflation rate. Figure out a rate of return for your investments. Guess how long you think you’ll live. Put these assumptions into the calculator, and it will tell you just how much you need to have at retirement in order to receive the income stream you desire.
The problem is your assumptions could be off. And if they’re off by just a little, they could skew the result by a significant amount over your remaining life.
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