Even the most disciplined planners can face unexpected hurdles. Your career takes a turn for the worse or your child’s education is costlier than you’d expected and, just like that, your savings goals can be in jeopardy.

Here, then, is the reality behind seven assumptions savers often make—and solutions that can help keep you from being caught short.

Goal: Retirement

Assumption 1: My expenses will be lower in retirement.

Reality check: Many retirees find they spend just as much money in retirement as they did while they were still working. Plus, most want to travel and pursue other passions, and those things cost money. You’ll also need to account for unexpected expenses and other costs, such as health care, not all of which will be covered by Medicare (see Assumption 2, below). What’s more, average life expectancy in the U.S. increased by roughly eight years between 1970 and 2017, so your money may simply need to last longer than that of previous generations.

Course correction: When estimating your retirement savings goal, assume your current expenses will remain the same, minus the amount you’re saving annually toward retirement. From there you can calculate your target portfolio size, as well as how much you’ll need to save each year in order to reach your goal. Also tally up any surprise expenses from the past several years and incorporate an annual average into your final projections. Finally, factor in inflation and life expectancy. (You can run the numbers using an online calculator or working with a qualified financial planner). If any of the outcomes give you pause, consider revisiting your savings rate or strategize now on potential cutbacks.

Assumption 2: Medicare will cover my health care costs.

Reality check: Medicare doesn’t cover many of the health care expenses retirees will encounter, including most dental, vision and hearing care. Perhaps more important, you have to pay out of pocket for any long-term care, unless you obtain supplemental insurance in advance.

Course correction: Review what’s covered at medicare.gov and estimate what your annual out-of-pocket health care liability might be. Also consider contributing to a health savings account (HSA), if your employer offers one. Contributions to HSAs are tax-deductible, their assets typically grow tax-free, and withdrawals are also tax-free, so long as they’re used for qualified medical expenses. You may want to investigate long-term care insurance options, as well, since the number of Americans needing long-term services and support is expected to nearly triple, from 10 million in 2010 to 27 million1 by 2050.

Assumption 3: I’ll be able to work as long as I want or need to.

Reality check: Nearly 8 million older Americans are in search of work or stuck in low-quality jobs, according to a 2018 analysis by The Wall Street Journal.

Course correction: Many people take as a given they’ll be able to work as long as is necessary or desirable. But your health or circumstances may not allow for the level of earnings you were counting on, so be careful not to be overly reliant on work when it comes to your financial projections. Rerun your savings projections assuming early retirement and/or relatively low-wage work in retirement.

Assumption 4: I should play it safe with my investments in retirement.

Reality check: Although a conservative retiree’s portfolio might be 20% equities and 80% cash/fixed income, a greater allocation to stocks can help offset the risk of outliving your savings. Indeed, an analysis by Schwab Center for Financial Research found that a retiree with a 60% allocation to stocks was able to take larger withdrawals than a retiree with a 20% allocation to stocks while still maintaining the same degree of confidence that her money would last 20 years.

Course correction: A 60% allocation to stocks in retirement isn’t for everyone, but you do need some exposure to stocks if you want to generate income and maintain growth potential. Holding a mix of assets with varying risk levels can help support those goals. A financial planner can help you create an approach that accounts for multiple rates of return and retirement scenarios. He or she can also help you assess how much risk makes sense for your specific situation.
 

Goal: First home

Assumption 5: I can deduct the interest on my mortgage.

Reality check: Because of recent changes to the tax code, you can deduct the interest only on up to $750,000 of mortgage debt, and interest paid on a home-equity loan (HELOC) is deductible only if the proceeds were used to purchase or substantially improve your primary or secondary residence.

Course correction: Be realistic about your mortgage-interest deduction when evaluating the true annual cost of your home—especially if you’re counting on it when calculating the amount of tax that’s withheld from your paycheck. Also be sure to double-check the IRS’s rules on eligibility if you’re expecting to deduct the interest on your HELOC.

Assumption 6: Real estate is always a safe investment.

Reality check: Like any asset, home prices can go down as well as up. In October 2008, for example, home prices plunged a record 18% year over year, as measured by the Case-Shiller 20-city composite index. As a result, many borrowers suddenly owed more than they could hope to recover in a sale. And many had to wait years for the market to recover before they could consider selling their homes, which may have compromised their ability to accept employment opportunities elsewhere.

Course correction: First and foremost, view your home as a place to live—not primarily as an investment on a par with stocks and bonds. Real estate prices in high-demand markets may rise quickly, but the majority of homes will take many years to appreciate enough to recoup your closing and any improvement costs. Above all, buy within your means, don’t put more money into a property than you can reasonably expect to recover and try to eliminate any mortgage debt before you retire.
 

Goal: College

Assumption 7: Education debt is always worth it.

Reality check: Mounting student debt has been cited as one of the main reasons why so many young adults today can’t afford to buy homes or start families. Moreover, a record 8.9 million federal student loan borrowers were in default in 2017, with a million more borrowers expected to default every year. College debt is a growing problem for parents, too—especially when it comes at the expense of their retirement savings. Indeed, 14% of families who borrowed to pay for college in 2018 used parent loans exclusively, according to Sallie Mae.

Course correction: Higher education isn’t all about return on investment, but you should nevertheless discuss with your child what her or his choice of major could mean in terms of salary potential—and hence their ability to pay back student debt—as well as how much you’re willing to contribute. Where appropriate, consider less expensive in-state options or nontraditional means of earning a degree, like having your child complete her or his general education requirements at a community college before transferring to a more prestigious institution to complete their studies. Finally, consider a balanced approach to paying for college that utilizes a combination of financial aid, parent and student income, and savings. 
 

Prepare for change

When it comes to your own planning, it’s important to revisit your assumptions on a regular basis—at least annually, and ideally with a financial advisor who can bring a fresh perspective to your assumptions.

Time is your friend when it comes to saving money, so the earlier you can spot a potential flaw in your planning assumptions, the easier it is to make the necessary course corrections.