• That stock and bond market returns will be rosy.
    Most retirement calculators ask you to estimate what your portfolio will return over your holding period. It may be tempting to give those numbers an upward nudge to help avoid hard choices like deferring retirement or spending less, but think twice. What to do instead: Prudent investors should ratchet down their market-return projections somewhat just to be safe. Morningstar equity strategist Matt Coffina has said that long-term real (inflation-adjusted) equity returns in the 4.5% to 6% range are realistic. Vanguard founder Jack Bogle’s forecast for real equity returns is in that same ballpark.
  • That inflation will be mild or nonexistent.
    Currently benign inflation figures—CPI measured less than 1% in 2014—may make it tempting to ignore, or at least downplay, the role of inflation in your retirement planning. Like robust return assumptions, modest inflation assumptions can help put a happy face on a retirement plan. What to do instead: Conservative investors should use longer-term inflation numbers to help guide their planning decisions; 3% is a reasonable starting point.
  • That you’ll be able to work past age 65. Older adults are pushing back their planned retirement dates. Whereas just 11% of individuals surveyed in the 1991 Employee Benefit Research Institute’s Retirement Confidence Survey said they planned to retire after age 65, that percentage had tripled--to 33%--in the 2014 survey. What to do instead: You can plan to work longer while also pursuing other measures, such as increasing your savings rate and scaling back your planned in-retirement spending. At a minimum, give your post-age-65 income projections a haircut to allow for the possibility that you may not be able to--or may choose not to--earn as high an income in your later years as you did in your peak earnings years.
  • That you’ll receive an inheritance. Increasing longevity, combined with long-term care needs and rising long-term care costs, means that even parents who intend for their children to inherit assets from them may not be able to. What to do instead: If you’re incorporating an expected inheritance into your retirement plan, it’s wise to begin communicating about that topic as soon as possible. — Christine Benz for Morningstar.

Read the rest of "4 Dangerous Assumptions That Could Hurt Your Retirement" here.