You will never, ever, get it 100% correct. Whatever you predict. However carefully you calculate you will never be totally accurate. That’s because the future is not predictable. We can use data, models and past information to narrow the parameters within which we believe things will operate in the future, but we cannot ever accurately predict what will happen.
We can look at historic interest rates and say that over the past 25 years interest rates for deposits (savings) have averaged 4%, and we can then use that information to predict that in the next 25 years interest rates MAY do something similar. But that is no more than a guess about the future based on the past. Simply a guess.
We do know that things tend to operate within certain defined parameters, and that although there are outliers, most of the time most of the things that we concern ourselves with will sit within what we class as ‘normal’ boundaries.
So we can factor in our estimates of future interest rates, or investment returns on the FTSE 100 or whatever else we are concerned with for our model and our predictions, but we should never discount the outlier situations that will inevitably come along.
That’s not to say that we should live in fear of them either. They are just one more variable that we should consider when we decide how we are going to calculate what is enough and how we are going to plan for using it in the future. Not plan will ever work out 100% accurate. We won’t die spending our last £1 on a call from the hospital to say goodbye. It may be that we have £2 left and only need £1 for the call, or it may be that we need to borrow £1 from the patient in the next bed to make that last call. Or a million different alternatives that, when we set out on this journey and put our plan together, we could never have seen happening. But just because the future is another land that we cannot map doesn’t mean that we shouldn’t take what we know today and use that to try to fashion a map as best we can, taking into account as many factors and variables as we can and try to make it is useful and legible as possible. And if nothing else we should try and make it waterproof. The first sign of rain and we don’t want all our ideas and plans washed away!
Remember that trying to work out what is enough for you and trying to make a plan for a full and happy life free from constraint and expectation is not a moonshot. It is not that you are strapping yourself into a seat and then lighting a huge rocket underneath you in a one-way trip. It’s not shit-or-bust. The thing about the future is that just as it cannot be predicted and is not set in stone, nor too are you. The worst thing that can happen is that you realise part way through that your predictions were inaccurate. Maybe you thought you’d need £25,000 a year to live off and the reality is that you need £30,000. OK, so it’s not all crash and burn for your rocket. It just means you need to make some adjustments to your flight plan. You need to find £5,000 a year more. Maybe a small project or a part time job? Maybe move to somewhere with a lower cost of living (and probably a higher standard of living!)? It’s not that the plan has failed. It’s just that you are travelling into uncharted territory and need to make some small adjustments for what you find there. That’s all.