Editor: Crass Cash
After watching the movie Zero Dark Thirty I was struck by how the CIA thought in only probabilities. There were no, black or white answers to anything, but rather “Fifty Shades of Christian Gray” just like in life. For instance 30% of us will die from now until the traditional retirement age of 65. If you die single with no money and no dependents, congratulations you won the retirement game.
As almost everybody, but a teenager knows, life can be very unpredictable and unfair. Which is why when you choose a financial planner or retirement calculator, you should be presented with probabilities, not absolutes.
For instance, if you save $100 per week for the next 35 years starting with nothing, then you’ll have an X% chance of reaching your retirement goals. The greatest factor in this is the investment return and NOBODY is able to predict this. They can make a guestimate as to possible scenarios, but that’s it. Here is a link to just such a retirement calculator. Play with the variables to see how dramatically things can change. Your final assessment should be conservative though.
http://cgi.money.cnn.com/tools/retirementplanner/retirementplanner.jsp
The same can be said for your child's college savings plan. You know how much college costs now, but do you know how much it will in 18 years? No you don't. Do you know how well your investments will do over 18 years? No you don't. The only thing that you can do is make the best SWAG (Scientific Wild Ass Guess) and adjust as you get closer and closer. Regardless, it's way better than doing nothing at all!
As almost everybody, but a teenager knows, life can be very unpredictable and unfair. Which is why when you choose a financial planner or retirement calculator, you should be presented with probabilities, not absolutes.
For instance, if you save $100 per week for the next 35 years starting with nothing, then you’ll have an X% chance of reaching your retirement goals. The greatest factor in this is the investment return and NOBODY is able to predict this. They can make a guestimate as to possible scenarios, but that’s it. Here is a link to just such a retirement calculator. Play with the variables to see how dramatically things can change. Your final assessment should be conservative though.
http://cgi.money.cnn.com/tools/retirementplanner/retirementplanner.jsp
The same can be said for your child's college savings plan. You know how much college costs now, but do you know how much it will in 18 years? No you don't. Do you know how well your investments will do over 18 years? No you don't. The only thing that you can do is make the best SWAG (Scientific Wild Ass Guess) and adjust as you get closer and closer. Regardless, it's way better than doing nothing at all!
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