Step 8: Your 30 Year Forecast (Graphical)

Understanding Your Retirement Plan

1. Growth of Your Money (Rate of Return)

Think of this like the "interest" your money earns. Right now, this model applies the same growth rate to all of your accounts (like your 401k, IRA, and savings).

• Keep in mind: Money in a bank account usually grows much slower than money invested in the stock market.
• Be Realistic: Don't just pick a high number! It is important to pick a rate you think is actually possible over the next 30 years.
• Learn More: Check out this guide on historical returns for Stocks, Bonds, and Cash to help you pick your number.

2. The Cost of Living (Inflation)

Inflation is the reason a candy bar costs more today than it did when your parents were kids.

• As you slide the Inflation bar higher: You will notice that the "Monthly Funds Required" goes up every year.
• How it affects your savings: Because things become more expensive, the model has to take more money out of your asset accounts to make sure you can still afford your same lifestyle. If you set inflation too high, you might see your savings disappear faster!