We’ve been hearing a lot about “fake news” lately and now there’s some concern that the president’s budget will use overly optimistic economic assumptions. Regardless of how you feel about the budget and the assumptions it’s based on, that’s certainly not a mistake you want to make in your own planning. After all, the government can simply pass on any mistakes to current or future taxpayers, but we have no such luxury. Here are some overly optimistic assumptions that may be producing a retirement planning calculation based on “fake news:”

1. I can live on a lot less income in retirement. When I ask how much money they’ll need in retirement, many people give me a much lower number than their current income. First, there’s a tendency to underestimate your spending so start by tracking your actual expenses. However, there are some legitimate reasons why your expenses may be lower in retirement. For example, your mortgage may be paid off, your kids will be on their own (hopefully), and you won’t have to spend money commuting or eating lunch at work.

On the other hand, even if your mortgage will be paid off (which may not be the case for a “soaring” number of retirees), you’ll still have to pay homeowner’s insurance, property taxes, and maintenance (which can be higher with an older home). You may also find yourself spending more on eating out, travel, and entertainment with all your extra free time. Don’t forget to factor in medical costs as well, especially if you’re retiring before Medicare eligibility at 65. Even with Medicare, there are out-of-pocket premiums and other costs.

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