A comprehensive retirement plan is the roadmap that guides your financial decision-making throughout retirement. This plan should detail every aspect of your financial life, showing you how much money you’ll need each year, how much you’ll take from each account, how much each asset is realistically projected to grow each year, the impact of inflation, etc.

Most of the retirement plans we make today cover 30 to 40 years. There are several ramifications that follow from making plans that cover such long time periods. One is that a small change in one assumption can have ripple effects, with the seemingly small change leading to large results. There are four key assumptions that determine whether or not your plan will be successful: your income needs through the years; inflation rates; rates of return on your investments; and health-related costs. Each of these assumptions must be carefully, and accurately, input into the plan in order to create a map you can trust to describe and direct your financial course of action.

Another ramification of long planning periods is that there is more time for something to go wrong. This highlights the need to control risk very carefully. When we make a retirement plan, our goal is to protect it from each and every worst-case scenario. This might be an economic crises that occurs rarely. However, if you are retired for several decades, you actually have a high probability of going through one or more economic tailspins that are considered quite rare when viewed from a more short-sighted perspective.