Are you assuming when it comes to your financial plan? Let’s talk about what common assumptions people have and how to properly plan and prepare for retirement.
(Click the featured times below to jump forward in the episode)
We all know what happens to you and me when you assume. Both David and Walter have had that word written in big bold letters on the board to remind them what happens when you assume. What kind of assumptions do we make (but shouldn’t!) when it comes to financial planning?
Are you assuming you’ll spend less when you retire? What does David see in practice? When you get to retirement, you often want to travel and spend time with grandkids. It’s easy to assume that you’ll be able to take on a more laid-back lifestyle but you might be surprised by how active you’d rather be. Before you retire, make sure you have a projection of what you’ll spend instead of an assumption. Do you have the assets to cover those costs? How does your plan provide for that spending?
Will taxes be higher in retirement? Based on all of the recent spending, tax rates are likely to go up. What we don’t know is how much higher they may go. Right now, the tax cuts passed during the Trump presidency will automatically revert up if Congress does nothing about it by the end of 2025. With government spending continuing to go up, be prepared for taxes to go up in the future instead of going down.
Have you fallen into thinking that you should pay for your kids’ college before saving for retirement? Remember that there are financial aid options and loans available for college, whereas this doesn’t exist for your retirement. It’s perhaps a noble assumption but may cause more problems than it helps. While you might think you can keep working in retirement, that’s not always the case. Be sure to plan for retirement before you consider paying for college for your kids.
Worried you’ll never be able to retire? Some make this assumption and get nervous for the future. The best time to start saving is in your twenties, but regardless of how old you are, saving now is a good idea. Don’t think that if you’ve missed out on saving in your 20s and 30s that all is lost. How and where can you catch up when it comes to saving for retirement? David shares how you can ensure you can save and prepare as you near your retirement.
Listen to the entire episode or click on the timestamps below to hear more about a common assumption.
[4:37] – Do you assume you’ll spend less in retirement?
[6:57] – Assume your taxes will be lower in retirement?
[10:34] – Think you should get your kids through college before saving for retirement?
[12:44] – Feel like you’ll never be able to retire?
“Before you retire–maybe five years before you retire–make sure you have not an assumption, but a projection of what you really think you might spend in retirement.“
– David Dickens