The following is selection from financial adviser Justin Shaw. Most people will retire with a false sense of security, often developed from the financial industry itself. The industry’s focus is to tell their clients what they want to hear instead of what they actually need to hear. As sad as it may be, this is the prevailing approach to today’s planning.

 

Free online self-help tools often misrepresent the analysis of one’s financial health. Clients fail to realize that financial calculators are an oversimplification of future financial needs. They offer an easy answer, and fail to take a myriad of economic fluctuations into consideration.

 

These variables are purposefully designed to make an individual’s financial outlook appear better than it actually is. Such tools can actually do more harm than good! The fact that their decisions become predicated on falsehood may lead to an unfortunate reality. False assumptions may include low rates of inflation and high rates of return on their assets during their retirement years. Their poor decisions are predicated on a general lack of insight into the complex inner workings of our financial system, combined with a stubborn and misguided certainty about the decisions they are about to undertake.

 

A much different picture begins to present itself when I enlighten them of a more realistic inflation rate of 5% instead of their 2.5%, and a rate of return at 7% instead of their 10%. Taxes fluctuate, so one year you might pay 20%, and the next, 25%. This more realistic scenario means that the money that was going to last until age 100 will now only last until age eighty-five. What a shock this must be to any unprepared centenarian. The reality is that most people are, in fact, totally unprepared for the future.

 

Wisdom dictates that it’s better to realize this five years before, rather than five years after, a person retires. Consider that the two most common ways people run out of money during retirement include having an unrealistic budget and exposure to “unexpected market losses” while taking withdrawals from their retirement accounts  - Justin Shaw.  This press release contains selected content from Amazon Best Seller Lists The Soul of Success featuring Justin Shaw.