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So do you want to know the impact your retirement age will have in terms of your retirement savings?
If you plan to retire at 62 versus 67, you would have to invest almost 5% more to achieve that goal for 62. However what occurs if you plan to retire at 67 and because of medical reasons you have to retire at 62? A miscalculation in your rate of returns could have a catastrophic effect on your retirement accounts and your lifestyle. The best strategy is to have pessimistic projections on returns in order to figure out how much to save.
Typically if you think you’ll work to 70, you won’t save as much, assume you’ll be unemployed at 58 so you tighten your belt. How flexible are you? This type of thinking will allow you more control over how aggressive you are in types of mutual fund you select within your IRA. Also to consider is your geographical flexibility in maintaining a high paying job all the way through your later years. Also what would you do if you or your partner lost a job, is there an emergency fund? The suggestion in the video is that at short and long term, a certain amount of pessimism is a good and healthy thing towards designing a goal for your retirement planning and savings.