What Assumptions are you making for your Retirement?

Was listening to an earlier podcast from the Retirement Answer Man from May of this year. His four Podcasts during that month dealt with the assumptions people make in planning for their retirement. Obviously these assumptions will greatly affect the amount we save, the timeline of our retirement, and the potential happy future we will have.

Some of the areas covered by

  • Life Assumptions (how long will you live, how long will you continue to work, who will care for you as you get older, etc.)
  • Costs (spending, regular inflation, healthcare inflation, use of averages, etc.)
  • Markets (returns on stocks, bonds, withdrawal strategies, etc.)
  • Rules for making assumptions (recognize these are assumptions, be flexible, beware of extreme assumptions, etc.)

It made me think of the assumptions we are currently using, especially after our meeting with the financial advisor at the end of 2019.

Our base assumptions:

  • Longevity: Me 97 Years old, Mrs. 39 Months 99 years old
  • Work till I am 58, Mrs. 39 Months is 60
  • Take Social Security at 67
  • Social Security annual increases: 2%
  • Inflation: 3.25%
  • Healthcare inflation: 6%
  • Investment returns (60/40 split): 7.2% before inflation
  • Budget and pay our own medical until we hit 65. Medical costs will be roughly what they are now (plus expected medical inflation rate)
  • Budget of $78,000/year for expenses (including medical for first 5-7 years) – adjusted for inflation
  • Move to new home at some point, but it will be roughly same cost as what we sell existing home
  • Place we move to will have roughly same living costs as what we currently have (i.e. no savings)

So what are the assumptions you are using to do your planning?

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Mr. 39 Months

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