Is Our Obsessive Focus on Forecasting Messing with Accurate Retirement Planning?

Visions of retirement are something most of us entertain long before reaching an age where it’s a possibility. While some picture themselves lounging on sugar-white beaches, others plan to travel the world and hit all of those destinations they’ve never had time to see or explore.

For many of us, the dream of retirement is easy to conjure up. The planning that goes into making that dream a reality can be far less straightforward.

It’s human nature to look for clear and concise answers to complicated questions. Wondering about how to best plan for those idyllic retirement goals is no exception to the rule.

Those beginning to consider the logistics of retirement planning often depend on financial forecasts to lead the way. On the surface, it makes sense. People want explanations, and financial projections appear to have all of the answers we’re craving rather immediately.

However, underneath the shiny surface, financial forecasts are typically made up of murkier waters. By its very definition, a forecast is built on predictions.

Are these predictions based on facts and trends? Yes. Are these predictions that come with guarantees for financial freedom in retirement? Not at all.

Having retirement goals is great and motivating. That said, our obsessive focus on linking retirement planning with financial forecasting makes a person wonder. Would things look different if we just let go of this financial forecasting concept just a little?

As lovely as it would be to depend on a forecast and know things would work out, life is more complicated. Let’s consider what things might look like with other planning strategies and a little less of a constant frame on the forecasting.

We Might Change our Spending Habits Now for a Better Retirement Later

The very nature of forecasting asks investors to put their faith in what might happen tomorrow. There’s a pressure that builds around tend anticipation. Forecasting comes with the expectation that you’re willing to make financial decisions before anything has happened to change the circumstances.

When it comes to retirement planning, taking these types of risks sometimes works out. Then again, sometimes it doesn’t. In fact, focusing too intensely on tomorrow’s stock market could mean overlooking opportunities for savings that are available today.

One of those places where you can find savings outside of a financial forecast is personal spending habits. As we make more throughout our careers, it’s endlessly tempting to spend more too.

When retirement feels far off, an extra dinner out here and there doesn’t seem to make a real difference. However, tucking the amount you would otherwise pay on a fancy dinner into a savings account instead, even twice a month, could be significant when you reach retirement age.

While that’s a single example, there are many more spending habits to consider. Taking time to sit down and evaluate where your money goes monthly is an excellent way to see if there are places where you could redirect simple funds for retirement.

Setting aside money you won’t notice today could make for a great nest egg to benefit from in retirement. The beauty of this strategy is you don’t need a forecast to tell you whether or not the money will be there because it already is.

We Might Start Considering Actual Post-Retirement Expenses

Putting all of your bets on financial forecasting can feel like everything depends on a favorable market. In reality, this is only part of a comprehensive retirement planning picture.

On a personal level, it’s easy for many of us to fall into the habit of forecasting the finances we’re responsible for today onto our retirement plans. While this is natural, it’s just not realistic.

The reality is, there are quite a few pre-retirement expenses that drop off when we put work-life behind us. These are easy to overlook in the shadow of looming financial forecasts, but if we step back and consider them for a moment, we might be pleasantly surprised!

One of the most significant changes that most retirees see in their income is payroll taxes and pre-tax contributions. For many working professionals, these payments become an afterthought as the active, working years roll on. Often, that’s because they’re taken from paychecks before that money is ever seen or received.

Once you retire, that’s no longer a factor in your financial equation. The offset to income can be refreshing!

The thing is, retirement is a time of life when there are quite a few expenses that fall off the bill payment list. These could include everything from tuition payments for kids in college to life insurance premiums.

Many people planning for retirement also forget to consider that they no longer have expenses related to commuting. Without travel-to-work fees and costs, you’re likely going to spend less on gas, parking, and vehicle maintenance after your last day on the job.

Partner Up with a Professional

Focusing solely on financial forecasting means you’re essentially leaving all of your retirement planning to chance. Doesn’t it make more sense to depend a little bit with the professionals too?

Finding a South Jersey financial advisor like Independence Wealth is a quick and straightforward way to get a much more comprehensive look at what retirement planning entails. Your New Jersey financial advisor takes time to understand your specific situation and uses that information to create a customized retirement plan.

That is important for those looking for a solid foundation to stand on regarding retirement planning. Financial forecasting takes a universal approach to savings and investment. An advisor is trained to prioritize personal goals.

Working alongside a professional also offers up a chance to factor in lifestyle fluctuations without the need for panic or impulsive financial decisions. Simply put, professionals give people the time they deserve to create a plan, adjust it as needed, and confidently move forward towards retirement.

Embracing Strategic Retirement Planning

Please don’t misunderstand. Financial forecasting isn’t inherently detrimental. In fact, there are plenty of forecasts that can prove helpful.

That said, when it comes to successful retirement planning, an unwavering focus on the stock market could leave you in the lurch. Predictions are never guarantees when it comes to the reality of your retirement situation.

For some, an obsession with forecasting can lead to overestimating how much you’ll need in retirement. Others misread the market and end up underestimating their expenses. Either way, these mistakes are likely born from a belief that forecasts today hold for years down the road.

Instead of guessing, it’s time to start focusing on planning that revolves around solid strategies. There’s a sense of confidence in reducing the risk and concentrating on the potential. And just like that, those blue waves and white sands feel closer than ever before.