Retirement Planning Misassumptions
Retirement planning is one of the most common conversations we have with clients. We spend time exploring what a “dream retirement” actually looks like, digging into both the financial and non-financial details that are often percolating in the background. Throughout this process, our goal is to arrive at a set of reasonable assumptions that align with clients’ expectations and our real-world experience. Rates of return, inflation, life expectancy, and spending patterns all need to be estimated in order to build a projection that feels both tangible and actionable.
One of the real benefits of working with an experienced advisory team is that, while it may be the first time you’ve retired, helping people make these decisions is something we do regularly. That perspective matters.
The challenge, of course, is that even reasonable assumptions can still lead to unreasonable outcomes if we’re not careful. Over the years, we’ve found that many retirement plans fall short not because clients failed to save enough, but because the assumptions built into the plan were overly optimistic — or because life simply unfolded in ways the projections couldn’t anticipate.
This is where many plans quietly go off track. Not due to a single bad decision, but because a handful of common assumptions are generally taken for granted without much scrutiny. Below are a few that we see regularly.
Misassumption #1: Linear Projections
Most retirement projections assume a relatively smooth, linear path: steady investment returns, predictable inflation, and a clean transition from work to retirement, followed by gradually declining spending over time.
Real life is rarely that tidy.
Markets don’t deliver returns evenly. Inflation doesn’t move in straight lines. Health events, family needs, and personal priorities evolve. Retirement plans are path dependent — meaning the order and timing of events can matter just as much as long-term averages.
A plan that looks perfectly adequate on paper can become stressed if negative returns arrive early, inflation runs hotter than expected, or spending spikes at the “wrong” time. This is why we tend to be conservative with traditional planning assumptions — not because we expect the worst, but because we want plans that remain resilient when reality diverges from the forecast.
Misassumption #2: “We’ll Downsize in Retirement”
This is one of the most common assumptions we encounter — and one of the least reliable.
Many couples fully expect to sell the family home and unlock a meaningful amount of capital in retirement. In practice, that often doesn’t happen. Emotional attachment, proximity to family, and the comfort of familiar surroundings can make selling far more difficult than anticipated.
And for those who do downsize, the financial impact is usually overstated. Smaller homes often come with other desirable features — better locations, newer construction, single-level living, or access to amenities — that may keep purchase prices surprisingly close to the value of the original home, especially after transaction costs.
The result in both scenarios is the same: the expected “windfall” from downsizing either arrives much later than planned or doesn’t materialize at all.
Misassumption #3: “We’ll Spend Less Once We Retire”
Another common belief is that spending naturally declines in retirement. In our experience, this is rarely true.
Retirement often means more travel, more leisure activities, more dining out, and spoiling grandkids. We regularly see clients funding extended family vacations, helping with education costs, or simply enjoying the flexibility they worked decades to earn.
Spending also tends to be lumpy. There are stretches where expenses rise meaningfully — sometimes by choice, sometimes by necessity. Later in retirement, health-related costs often increase, replacing discretionary spending with essential expenses. The idea that retirement is a low-cost phase of life doesn’t align with what we typically observe.
Misassumption #4: “Precision Equals Accuracy”
Retirement projections often present themselves with a comforting level of detail: exact withdrawal rates, precise balances at specific ages, and neatly charted outcomes decades into the future. While these tools can be helpful, they can also create a false sense of confidence.
Highly precise plans are not necessarily more accurate. Small changes in returns, inflation, longevity, or spending — all variables outside our control — can materially alter outcomes over time. The more detailed the projection, the easier it is to forget just how many assumptions underpin the result.
In our experience, robust plans outperform precise ones. A plan built on conservative assumptions, with flexibility and margin for error, is far more likely to succeed than one optimized to a narrow set of expectations.
The goal of retirement planning is not to predict the future with certainty, but to prepare for a range of plausible outcomes. Emphasizing resilience over precision helps ensure that when reality deviates from the forecast — as it inevitably will — the plan can adapt without compromising long-term goals.
For this reason, retirement planning is not a one-and-done exercise. A good advisory team revisits projections regularly, incorporating new information as circumstances evolve. The target is always moving, and the plan needs to move with it.
Prepare and Adapt
None of these misassumptions are unusual. Most are held by thoughtful, well-prepared families. The challenge is that retirement planning is often treated as a static exercise, when in reality it is anything but.
The most durable plans are built on conservative assumptions, reviewed regularly, and adjusted as circumstances change. They are designed to evolve alongside the people they are meant to support. Our role is not to predict the future, but to help families navigate it — thoughtfully, deliberately, and with a long-term perspective.
We are currently expanding our practice. If you enjoy what you are reading, please reach out to explore a relationship with our team today.
