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Retirement planning is not always on target, so plan accordingly

Planning for your retirement is not an exact science and there are so many ways that your plan can get off track that it can be paralyzing. Knowing why your plan gets off track is the first step in having a better chance of reaching your retirement goals.
What are some of the reasons our retirement plan be derailed?
It starts with the investments we choose, because we can’t predict future performance, we invest in the hope they will perform as in the past.  That doesn’t always happen.  The other reason is that we often make assumptions about the future that don’t really materialize. The amount of money we need to save for our retirement is based on those assumptions and bad assumptions can cause our retirement savings to be less than we actually need.
What are some of the main uncertainties we have to plan for?
The biggest are related to how long we will work and how long we plan to live in retirement, the other uncertainty is what our planned retirement lifestyle will actually cost.  If we don’t work as long as we hope, we have less time to save.  If you hopefully live longer in retirement than you expect, you will need more money.  And the biggest unknown is what will be the your cost for healthcare in retirement.
How can we overcome these and make sure our plan is on target?
The first step is to be more conservative in your assumptions, for example, if you think you will work until 67, save enough so you can retire by 64, this will give you a good cushion if your circumstances change.  Use this same process for all the assumptions you have made in your retirement planning.  Conservative assumptions help increase the odds that you will reach your retirement planning goals.
One can never do enough to guarantee a successful retirement but you can certainly increase your odds.  However, if you review how you are tracking on your goals and make adjustments accordingly including updating our assumptions, you will have more opportunities to make corrections.

Posted: 9/11/2014 with 0 comments

Categories: Money Matters, Retirement

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