Retirement Planning Assumptions

Planning for retirement is arguably one of the most important things people can do to safeguard their future. However, retirement planning can be confusing because assessments are built on assumptions. No one truly knows what will happen ten years from now, and it’s even harder to predict the economic landscape when you finally retire. So, what do financial experts do when trying to recreate personalized and sustainable retirement plans? They typically use historical averages, make assumptions around the current and future economic landscape or how well your investments will perform in the long term.

Nonetheless, if assumptions are off by some margin, retirees could face too little or too much retirement money. None of these outcomes is favorable because too little will obviously cause lifestyle problems, while having too much would mean unnecessary sacrifices were made when growing your retirement bundle.

Retirement Budgeting and Why It’s Important

Running out of money is the one thing most people fear as far as retirement is concerned. This makes sense because if you’re physically healthy and financially prepared, your retirement could last as long as you’re working years. The good news is that creating a retirement budget can help you make sure you’re set for life. However, some people go to extremes and budget to the last penny. Although we don’t advocate for such extremes because nothing’s guaranteed in retirement, we believe in having a reality-based plan that has some allowance for your spending. Under representing your spending estimates has significant consequences when you extend that out on an inflation-adjusted basis over the long run. 

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