What You’re Assuming
And how it shapes your timeline, your number, and your decisions
The Assumptions Behind the Decisions
If you needed to list out all the assumptions going into your financial plan, could you? Not just the ones you’ve set intentionally, but the ones you’ve accepted without questioning, and the ones you know you need but can’t fully answer yet.
Some came from things you heard or read. Others were educated guesses. Some may have just been the default value in a retirement calculator.
You make decisions about how much to save, how much to spend, and when you’d want to step away. While those decisions matter, what tends to get less attention are the assumptions they’re built on.
Each of those decisions has an assumption behind it, whether you realized it at the time or not.
Decision: how much to invest. Assumption: what those investments will return.
Decision: what kind of lifestyle you want. Assumption: what it will cost to maintain it.
Decision: when you’d like to be done working. Assumption: what the years around that will look like.
Those assumptions might not feel like actual decisions you’re making. But they impact the outcome just as much as the decisions do. More important, changing just one assumption can reshape the outcome even if everything else stays the same.
Why Two Plans Can Look So Different
Two people can be saving the same amount and aiming for the same goal, but come up with very different timelines. One assumes higher returns and a lower spending need later. The other assumes more modest returns and builds in more room in their budget. Nothing about their effort changed, just the assumptions. The outcome looks completely different.
That’s part of what makes this tricky.
Assumptions don't come from one place and they don't all behave the same way. Some you've thought through intentionally. Most you're probably carrying around without ever really questioning. They're a mix, which means the outcome they produce is a mix too.
Some Assumptions Are Taught, Others Are Learned
Some of my assumptions came from my dad. He spent over 40 years in banking, has been a DIY investor and retirement planner most of his adult life, and shared a retirement projection spreadsheet with me years ago that shaped how I think about my own numbers. It helped me see things a generic calculator couldn’t capture — like what the gap between early retirement and Social Security looks like, or how to account for compensation that doesn’t change in a straight line.
His assumptions lean slightly conservative and I’ve borrowed some of that instinct. But I’ve also been willing to revisit mine as my own understanding has grown. The foundation was his. What I’ve built on it is mine.
Not all of it came from good decisions though.
I started investing right after the financial crisis. Not the most comfortable time to begin, but in some ways it turned out to be instructive. And in hindsight, the timing was pretty ideal.
My early investments did reasonably well. But I kept moving. When something gained, I’d sell and shift to something else. I didn’t want to give back what I’d made. I told myself I was being smart about it and locking in those gains.
Looking back, I wasn’t. I was reacting. For a lot of investors, the less you do the better the outcome tends to be. I was learning that the hard way.
That experience taught me something about my own assumptions that a calculator couldn’t. I had been assuming that staying active with my money was the same as staying smart about it. It wasn’t.
Placeholders, Not Permanents
We tend to focus on the FI number and treat it like the answer. In reality it’s just one version of the outcome based on the assumptions used. That’s easy to miss, because once the calculation is done it feels finished. The assumptions that created it don’t get the same attention. They stay in place, and we adjust our lives around that outcome.
It doesn't have to stay that way. I’ve gone back and adjusted my own assumptions before. Revised my withdrawal rate, expected returns, and what I think I’ll spend. Each change moved my timeline even though I hadn’t changed any of my actual behaviors. Just the assumptions.
Some of those adjustments have been straightforward. I’ve built in reduced spending at different points in retirement to account for the go-go, slow-go, and no-go years. Higher spending early when we’re active and healthy, pulling back later as that changes.
The assumptions are in my plan. But I’ll be honest: I haven’t fully connected those later-year spending reductions to what I’m currently saving toward. The assumption exists but it isn’t doing its full job yet. That’s a gap I still need to close.
Other assumptions I’m not ready to finalize yet. And won’t be for a while. When to claim Social Security is one. The right answer depends on how long I work, what my final earnings look like, whether benefits get reduced before I’m eligible, and how long my wife and I are likely to live. I can make an educated guess but I can’t set it with any real confidence yet.
Withdrawal strategy and Roth Conversion timing are similar. Both depend on tax rates, account balances, and retirement income that are still taking shape. These aren’t assumptions I’ve overlooked. They’re assumptions I can’t finalize yet because the information that would determine them is still being written.
That’s a different kind of placeholder than the ones I’ve already set. Not an assumption I made and forgot to revisit. An assumption I know I need but can’t complete yet.
Uncertainty is part of this, which means assumptions come with it. They’re guesses about things that haven’t happened yet. But they don’t have to stay fixed.
Think of them as placeholders that keep the calculation moving. Change them, and the result changes with them. It’s worth slowing down how those assumptions get set, and revisiting them as things change.
There are a few things worth doing when you look at your own assumptions:
Identify and think through what they actually are
Consider the assumptions you aren’t making
Understand how each one affects the others, including the ones you haven’t fully set yet
Your assumptions aren’t perfect. But they’re not set in stone either. They’re shaping the outcome whether you’re paying attention or not.
— Brad
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This is meant to help you think through financial decisions and tradeoffs—not tell you exactly what to do. It’s general in nature and not personalized advice (see full disclaimer).