It is exactly how I do planning as well (and is really the only way it can be done). We're talking about the future obviously, so it comes down to scenario analysis, and probabilities for the variables.
Start with estimates for income needs, then map out what different savings plans look like, timing of major purchases etc, timing of retirement, etc.
Then you analyse the scenarios, determine if the required savings rates are reasonable, and if necessary, change them accordingly. And you map it all out. Normally, we would design the plan using only investable assets, if possible. That leaves things like your home, potential inheritances, etc, as backups (i.e. Plan B, Plan C, etc). Ideally, you don't need Plan B, C or D, and you can live off of Plan A.
But all of that is best guesses. And it all comes down to choices. If you want to save 'just enough' that is up to you. If you want to save more, to build more security into the plan, that is also a choice. We recommend being very conservative, and building in multiple levels of buffer You implement on an ongoing basis, and rework the numbers periodically, as life unfolds.
One thing we find though, is that people tend to under-estimate all of the numbers. Most people assume that whatever their lifestyle is now, it will probably remain that way throughout life. However, what we find is that, as people get older and their income rises and expenses decrease (kids move out, mtge gone), their lifestyle and lifestyle expectations rise with them.
It is my experience that it is infinitely better to over-estimate (be conservative), than to under-estimate.
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