Key takeaways
- Every projection is an if-statement: change an assumption and the answer changes with it.
- Return, inflation, and contribution continuity carry most of the weight.
- Reading results in today’s money and testing the edges keeps estimates honest.
Every projection is an “if”
A projection says: if returns average this, if inflation runs at that, if the contribution continues — then the balance lands here. Change any if and the answer changes, sometimes dramatically. None of this makes projections useless; it makes them conditional, which is a different thing entirely. A good plan knows its conditions.
Where the ifs hide
Three assumptions carry most of the weight. The return: a single percent of difference, compounded for decades, moves outcomes enormously. The inflation rate: it decides what the final number actually buys. And the quietest one — your own behavior: the projection assumes the contribution continues through job changes, moves, and ordinary chaos. The third assumption is the one you control and the one most often broken.
Averages are not sequences
Markets do not deliver their average politely, one year at a time — they deliver a sequence of very different years that happens to average out. A smooth projection line is the average wearing a disguise. This matters most when money is being withdrawn, where a bad early stretch can do damage a later recovery cannot fully undo. It is why careful planning tests ranges, not just the middle line.
How to use estimates well
Three habits keep projections honest. Prefer today’s money: inflation-adjusted results answer the question you actually care about. Test the edges: run the plan at a return two points lower and see whether it survives — a plan that only works at optimistic assumptions is a wish. Revisit on schedule: a projection is a snapshot of its inputs, so re-run it when life changes them.
What this site commits to
Capital Allocation is built on a few fixed rules: every number is deterministic from what you enter; every assumption is labeled where the result appears; ranges are shown as ranges, never as promises; and nothing here is financial advice or a prediction. The projections are good tools precisely because they never pretend to be anything more.
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