4 Dangerous Assumptions When Retirement Planning

FUTURE PROOF: Incorrect retirement-planning assumptions are problematic because by the time a pension saver realises their plan is in trouble, it could be too late

Christine Benz 19 February, 2015 | 12:54PM

Assumptions aren't always a laughing matter, and that's certainly true when it comes to retirement planning, where "hope for the best, plan for the worst" is a reasonable motto. Incorrect retirement-planning assumptions are particularly problematic because, by the time a retiree or pre-retiree realises their plan is in trouble, they may have few ways to correct it; spending less or working longer may be the only viable options. 

What follows are some common – and dangerous – assumptions that individuals make when planning for retirement, as well as some steps they can take to avoid them.

Assumption 1: That Stock and Bond Market Returns Will Positive

Most retirement calculators ask you to estimate what your portfolio will return over your holding period. It may be tempting to give those numbers an upward nudge to help avoid hard choices like deferring retirement or spending less, but think twice. 

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About Author

Christine Benz

Christine Benz  is director of personal finance at Morningstar and author of 30-Minute Money Solutions: A Step-by-Step Guide to Managing Your Finances.

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