My Net Worth

When we initially sign up for that 401(k) plan, the idea is to save money for our retirements. As our 'retirement' is sometime in the future, it is hard to predict how much or when we will be able to retire. Yet we all assume that we'll live that long and the money we set aside today will have grown to an amount that can support us in the future.

Are those reasonable assumptions? Let's take at some of the basic assumptions that we are making in saving money for retirement.

• You'll be alive 10, 20, 30, 40 years from now.
• The rules of the game (retirement) going into it are generally the same as when you retire (ie taxes, retirement rules, etc.)
• There will be fully functioning and efficient capital markets to sell your mutual funds back to for cash.
• The economy of the United States/world will continue to expand and grow and the stock market will reflect that growth.
• The United States will be a sovereign, free-market republic.

These are just a few of the basic, underlying assumptions I think we all make in investing for the long-term. They are reasonable assumptions to make, yet they are largely out of our control. Can we as individuals ensure the United States will be around in 40 years? Will the rules and taxes surrounding retirement funds be the same? Will we live that long (as individuals)?

This post isn't meant to be pessimistic or alarmist. It's about looking at this distant far off concept (retirement) and trying to understand some of the basic assumptions we all make. when