Quote:
Originally Posted by Enoch Root
Here's the thing when you're talking about how much you need:
If you under-estimate it, you outlive your money and spend your twilight years pinching pennies.
If you over-estimate it, you leave some to your kids or your favourite cause.
It's a rather asymmetrical risk/reward trade-off.
Also, if you have bad timing as to when you retire, it can significantly change the math. experiencing a significant market correction in the early years of retirement can put you back far enough that you never recover. Many people that retired in 1999 and in 2007/08 ended up going back to work - or at least trying to.
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If you overestimate you spend extra prime retirement years working.
If you underestimate you cut back marginally on your expenses early on to marginally decrease your standard of living. A rather asymmetrical trade off.
Agree that there is definite risk is timing your retirement. Here is a neat tool that calculates the probability that your money will last until death. The depressing / interesting part is how big the grey block of death is so if you want to maximize your length of retirement you need consider dying early as one of the factors.
https://engaging-data.com/will-money-last-retire-early/