Mistake #1: Using a Single Average Return
Most calculators default to 7% or 8% average annual return. You enter it, get a number, and plan around it. But as we covered in our Monte Carlo article, average returns hide the reality of volatile markets.
A $1 million portfolio at a steady 7% grows to $7.6 million over 30 years. That same portfolio with realistic volatility (standard deviation of 15%) could end up anywhere from $2 million to $20 million. Planning on the average case means you're wrong in most scenarios.
The fix: use a Monte Carlo simulation that shows you the range of outcomes, not just the average.
Mistake #2: Ignoring Taxes Completely
Your portfolio might show $2 million, but if $1.5 million is in Traditional 401(k)s, you could owe $300,000-$500,000 in taxes over your retirement. Most calculators show you the pre-tax number and let you assume it's all yours.
The real question isn't "how much do I have?" but "how much can I spend?" Tax modeling — including RMDs, bracket management, Social Security taxation, and IRMAA — is essential for an honest projection.
Mistake #3: Treating Inflation as Optional
Some calculators show results in nominal (future) dollars. $1 million in 30 years sounds great — until you realize it has the buying power of roughly $475,000 today (at 2.5% inflation). Others let you toggle "real vs nominal" but default to nominal, which flatters the projection.
Sagery shows everything in today's dollars by default, because that's what you can actually relate to. When we say you'll have $4,200/month, we mean $4,200 in purchasing power you'd recognize today.
Mistake #4: Assuming Constant Spending
A 65-year-old spends differently than an 85-year-old. Research consistently shows a "spending smile" — higher spending in early retirement (travel, activities), a decline in the middle years, and then an increase in late retirement due to healthcare costs.
Calculators that assume flat spending either overestimate your early-retirement needs or underestimate late-retirement healthcare costs. Spending phase modeling addresses this directly.
Mistake #5: Not Testing Your Assumptions
The most dangerous mistake is running one scenario and calling it a plan. What if you retire 2 years early? What if inflation runs at 4% instead of 2.5%? What if your employer match disappears?
Robust planning means testing your assumptions. Run the scenario with pessimistic numbers. See what breaks first. Then build a plan that survives the stress test, not just the happy case.
Sagery's What-If Analysis makes this trivial — six interactive sliders that instantly update your entire projection, including Monte Carlo results.
📌 Key Takeaways
- 1A single average return hides the reality of volatile markets — use Monte Carlo instead
- 2Pre-tax portfolio numbers can be 20-30% higher than what you'll actually get to spend
- 3Always view projections in today's dollars — nominal values are misleading
- 4Spending changes throughout retirement — the "spending smile" is well documented
- 5Test your plan with pessimistic assumptions, not just the happy case