Welcome to this edition of Money Matters with FSA, where we help you navigate key financial decisions with confidence. I’m Mike Zarrelli, CFP®, EA, and today we’re digging into a critical concept that underpins nearly every retirement plan we build: margin for error.
You’ve probably heard the phrases:
“Plan for the worst, hope for the best.”
“Under promise and over deliver.”
“Measure twice, cut once.”
What do they all have in common? They’re about preparing for uncertainty, and that’s exactly how we approach retirement planning at FSA Wealth Partners.
Retirement Planning Is Not About Perfection
When I sit down with clients in their 40s, 50s, or 60s who are dreaming about retirement, we always start with this truth: We can’t plan for everything.
Markets will fluctuate. Spending habits will change. Inflation will rise. Social Security may evolve. Medicine and life spans are improving rapidly. Retirement planning isn’t about locking in a “perfect” plan—it’s about building one that can flex with life’s inevitable surprises.
Think of Retirement Like a Cross-Country Road Trip
Imagine you’re driving from DC to Los Angeles. When you first plug the route into Google Maps, it gives you a ballpark ETA, but it’s almost guaranteed to change. Traffic, weather, and rest stops all affect the final time.
Your retirement plan works the same way. You need a direction and a destination, but as you get closer, we fine-tune the plan to account for real-world variables.
Why Your Retirement Plan Should Evolve
Some people treat their initial retirement plan like it’s set in stone. But your plan should be a living, breathing document that adapts over time.
We use tools like the retirement confidence dial, which gives us a score from 0 to 99%. This score reflects your plan’s likelihood of success based on the assumptions we’ve modeled. And those assumptions? They’re constantly shifting.
Markets don’t move in straight lines. Inflation doesn’t stay fixed. And your lifestyle in retirement will evolve from high-spending early years to slower, more frugal later years.
The Power of Stress-Testing Your Plan
Let’s say we start with a base plan and it gives you a 49% probability of success. That’s basically a coin flip, which is far from ideal. In this example, we could increase their score to 81% simply by adjusting their retirement age and optimizing their Social Security claiming strategy without changing their lifestyle.
But even then, we want to ask the next question:
“What if things don’t go according to plan?”
That’s where stress testing comes in.
What We Stress-Test For
We model dozens of “what if” scenarios, such as:
- Markets drop 20% before retirement
- Social Security is cut by 20%
- Inflation runs 1% higher
- You live 5+ years longer than expected
- Taxes rise significantly in retirement
- Healthcare costs increase more than projected
These scenarios aren’t doomsday predictions but possible realities. And our job is to make sure your plan can still work if even one of them happens.
For example, if Social Security gets cut by 20%, it might drop your success score from 81% to 66%. That’s still manageable, but it may require adjustments like saving more, spending less, or delaying retirement. We help clients understand these trade-offs before they become real.
Planning for Both Sides of the Coin
Here’s the good news: while some of these variables may work against you, others might work in your favor.
- Maybe inflation is higher, but so are your investment returns
- Maybe healthcare costs rise, but you end up spending less on travel
- Maybe Social Security gets cut, but your nest egg grows more than projected
That’s why flexibility is everything. We don’t just plan for what could go wrong—we plan for how to pivot when it does.
3 Questions to Ask Yourself
If you’re within 5 to 15 years of retirement, now’s the time to stress test your plan.
Start by asking:
- Has my retirement plan been updated recently?
- Would my plan hold up if markets dip or inflation spikes?
- Do I have a clear strategy if Social Security changes significantly?
If you’re not confident in the answers or don’t know where to start, we’re here to help.
The FSA Approach: Confidence Through Clarity
At FSA Wealth Partners, we don’t chase perfection. We build resilient plans backed by strategy, adaptability, and ongoing review.
Using our FSA Get Wealth Planning Process™, we help you navigate what’s ahead by aligning your plan with real-world risks and your long-term goals.
We believe that financial confidence doesn’t come from guessing—it comes from preparation.
Ready to Stress Test Your Retirement Plan?
If you feel like you’re on the right track but want to know how resilient your retirement plan really is, let’s talk.
📞 Call us at (301) 949-7300
📧 Email questions@fsawealthpartners.com
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