Podcast Episode 342: Can You Trust Retirement Income Projections on Your Account Statement?

We’ve all opened up a statement and seen the retirement income that’s projected from that account. Not every account has it but most do. The question is how much can you trust that number and can you base a retirement plan on what you see?

Retirement planning can be a daunting task, with numerous variables and uncertainties that can make or break your financial future. Understanding the intricacies of income projections and tailored strategies is essential to secure a comfortable retirement, and we brought Jake Doser, CFP® onto the podcast to help explain these projections a bit more.  

First off, relying solely on the income projections from your 401k statements is risky. These projections can be misleading due to generic assumptions and limited data that fail to capture the full picture of an individual’s financial situation. Getting a personalized income analysis can help create a realistic retirement plan, one that accurately reflects essential return rates and the longevity of your savings.

The reason many of these projections fall short is the forecasts rarely include details like Social Security benefits or pensions from past employment, which are critical components of most retirement strategies. We like to emphasize the importance of conservative assumptions when it comes to projecting retirement income and will typically advise against overestimating rates of return and underestimating expenses, advocating for a more cautious approach to ensure a stress-free retirement. But that’s why you want to have a detailed and personalized plan, which takes into account all sources of income and potential outlays.

For those who might feel overwhelmed by the process, remember that accurate retirement planning is not only about crunching numbers but also about translating those numbers into peace of mind. A financial advisor’s role is to provide candid advice and realistic expectations, ensuring that you retire on your terms and with the knowledge that you and your loved ones will be well taken care of.

Here’s some of what we discuss in this episode:

• How reliable are these projections?

• The income analysis we do with each client to help provide a more realistic projection.

• The variables that these projections aren’t able to factor in.

• How we approach conversations with people who aren’t in good shape for retirement.