It’s satisfying to fill out one of those retirement plan calculators offered by investment and insurance companies. They can make you believe you will retire in style. But take care not to make miscalculations that could lead to a lower level of savings. Consider taking life’s events and realities into account.
Lifetime salary. It’s easy to believe that you will have the same pay rate, or a higher one, as time goes by. According to the U.S. Census Bureau, on average, people hit their income peaks in their 40s and pay remains flat after that, or they will experience a pay reduction.
Years until retirement. Your forecast shows you working steadily through age 62 or 65, but illness, job loss or another circumstance could result in months or years without a job.
According to The Wall Street Journal, for many people, a retirement savings strategy is merely a best-case scenario. You should also consider a worst-case scenario and save more.
If you have work breaks, lower income in the future, or have to retire sooner, you will be prepared. If your best-case scenario works out, you’ll be in clover.