There’s an old joke about a business owner and his tax preparer. After giving the tax preparer all his relevant tax info, the business owner asks “How much do I owe?” The tax preparer shows the business owner the bottom line, to which the owner reacts with great shock—“That’s way more than I thought it would be!” To which the tax preparer says, “Well, what do you want the number to be?”
When you see a projection for your savings, such as how much your retirement account will be worth in X number of years, be careful not to put too much confidence in that projection. The reason is that the future is simply unpredictable, and projections aren’t guaranteed. The farther out into the future you go, the greater the likelihood something very different/unexpected will occur. But like the tax preparer, financial advisors can (and do) adjust the assumptions behind their projections to make the future outcomes look good.
Does that mean all retirement projections are worthless or unreliable? Not at all; watch the video to find out why.