I’m gonna go on the record right now and say that multi-decade projections of any sort, but specifically here, of saving and spending levels, are utter bunk. I know, totes controversial. I’m over here, stirring it up, making waves…yelling into the void.
Try to remember what your life was like 10 years ago. Feel it, see it, imagine it. Looking forward from that perspective, could you have imagined half of what has happened since then, and what your life looks like now?
I know I couldn’t have. When I was 38, I never would have spent $25k to take my family to Europe (I mean, aside from the fact that my kids were 4 and 1 at the time). And yet I did that earlier this year, with pleasure. Nor had I any concept of starting my own firm as a financial planner and enjoying this work so much that I can see doing it for decades more (which enables me to continue to earn and save, and delay the age at which I need to draw on my retirement portfolio).
That said, in order to plan, we have to have some sense of our destination. And so we make our best guess with the information we have now and make a plan around that. Time passes. We are that little bit closer to the goal, we gather more information, and re-do our guess. That guess is now a little more accurate, and we can make a little more accurate (and reliable) plan for your retirement. But it’s iterative, over time.
Because of the “make a guess, let time pass, reevaluate” nature of the work, I don’t see merit in getting hyper specific. But I do encourage you to revisit this high-level retirement projection regularly, as you draw closer to retiring. We do it once a year for some clients, less frequently for other clients.