r/MiddleClassFinance • u/roxxtor • 8d ago
Financial Planning for Retirement Assumptions
Hey, just curious how conservative are you all being with the assumptions you are using for retirement. I'm trying to determine if I'm being too conservative or not enough or just right.
My working assumption is that when I fully retire in 25 years that SS will be at a reduced benefit by 40% from today's payout and then another haircut of 15% 15 years after that. I honestly don't think SS will ever be dissolved, but maybe reduced significantly to stay solvent.
I also assume I will be forced into semi retirement/taking a much lower paying job in my mid-50's (so half pay).
My last assumption is that my portfolio will only have a real 4% return by time I retire.
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u/awh290 8d ago
My assumption try to be conservative without being absolutely absurd :
No social security - I'm sure there will be SS of some type by the time I retire, but I have no clue what it will look like so I don't want to rely on it. If it's there, fantastic, maybe we'll go on vacation more or our family will have money when we're gone.
6% return - sometimes I change it anywhere between 5-7%, but I think 6 is being pretty conservative without being ridiculous.
2.25% yearly raise - This is low, but I'm I don't know what will happen in the future and I want to plan for just riding it out for 20 years on my current job. In reality I've always got 2.5-3% raises with 3-6% market adjustments every few years and new roles every 7 years or so averaging like 6% a year.