3 Dangerous Retirement-Planning Assumptions

Probably the worst kind of assumptions that you can have is towards your retirement plan. The reason for this is because by the time, the retiree realizes that something is really wrong, it’s too late to do anything about it.

Unfortunately, a number of these assumptions are widespread. And so, in the best interests of everyone involved, here are 3 dangerous retirement-planning assumptions:

#1: Stock and Bond Market Returns Will Be Good

While over the long term, the returns on stocks have been good but it’s wiser to take down their market projections a notch or two with 4.5% to 6% being realistic. As for bonds, the returns can be considered meager at best at about 2% to 3% for high-quality funds.

#2: Inflation will be Minimal or Non-Existent

Given that inflation figures for 2014 was at 1%, it can be easy to assume that this run of good fortune will continue for a long time. Instead, use longer-term inflation numbers when making planning decisions, and for this: 3% is an excellent starting point. If you are successful in laying hedges for this, you can preserve purchasing power as soon as you begin purchasing retirement assets.

#3: You Can Work Past the Age of 65

No matter what you think about working past the age of 65, there are benefits that come with this rather than retiring at that age. If you’re able to make a living well past the age of 65, this can have positive benefits, in terms of the sustainability of your retirement portfolio. However, keeping this in mind, and taking your post-retirement figures into consideration, make the assumption that you won’t be able to earn as much or at all, and then save accordingly