Parameters/assumptions in a retirement plan: conservative enough?
I have a plan but wonder if my assumptions are reasonable. I'd hate to tell DH it is OK for him to retire in six months and then turn out to be wrong! I base our living expenses on a careful tracking of every penny spent in the last 10 years, so I am confident of the living expenses figure in the plan.
Do these other assumptions/parameters sound conservative enough?
1. Plan may need to cover us till we are 100 years old.
2. We will not earn another penny.
3. We will inherit nothing.
4. We will receive 70% of what appears in our annual Social Security estimate statements.
5. Inflation will average 3.5% over time.
6. Investments (balanced 60/40 equity/bond portfolio) will earn average 7% over time.
......(The above two translate to a 3.5% spread between inflation and investment earnings over time.)
7. The federal government pension system will not default.
8. The local civil service pension system will not default.
9. A sizeable untouched fund (3-4 years' living expenses) is sufficient for surprises/disasters.
- Paid for home and cash value life insurance can be tapped as a backup to above disaster fund if necessary.
I doubt *all* of the first 6 will fall out as stated, so together they seem conservative enough to give DH the green light. Any of these parameters jump out as being foolish or problematic???