January is traditionally a time for predictions. You can’t turn on the TV or pick up a newspaper without running into a talking head or media gadfly predicting how much snow we’ll get this winter or who will win the Academy Award or how long Taylor Swift’s next romance will last.
Making predictions is risky business, even for the so-called experts. Here are some predictions that turned out to be colossally wrong.
Henry Morton, president of Stevens Institute of Technology, was considered one of America’s most admired intellectuals when he was asked to opine on the business prospects of Thomas Edison’s light bulb. “Everyone acquainted with the subject will recognize it as a conspicuous failure,” was his learned assessment.
Fast-forward 135 years to the debut of the iPhone. In a national newspaper cover story, Microsoft CEO Steve Ballmer declares there is “no chance” the new phone will become popular.
In 1959, the founders of Xerox canvass execs at IBM to estimate the potential size of the market for copy machines. Their best guess? A total market of 5,000 at a maximum. Last year, Xerox reported over $2.5 billion in revenue from copiers. In the 3rd quarter alone.
Despite the risk, and the failures of greater prognosticators before me, I thought I’d make a few predictions of my own.
1) I predict that Hostess will make a comeback and we haven’t heard the last of Twinkies, Ding Dongs and Ho Hos.
2) I predict that 9-year-old Quvenzhane Wallis will win an Academy Award before 6-year-old Honey Boo Boo.
3) I predict that Tim Tebow will NOT become the spokesperson for marijuana in Colorado.
4) USAToday reported that in 2011, 44% of workers believe they’ll retire later than expected. That figure jumped to 57% in 2012. I predict this figure will continue to rise.
I also predict that the majority of these folks will not get to make this decision on their own. Some will lose their jobs. Others will suffer a health setback that will prevent them from working. As a result they will be more likely to tap into their retirement savings sooner and more likely to run out of money during their most vulnerable years.
Furthermore, I predict that that the ultimate size of your retirement nest egg will be more influenced by the amount of money you save rather than on your rate of return.
For example, let’s say you save $5,000 a year and earn 5%. After 30 years you’ll have $332,194. If instead you earn 7% a year, you’ll have $472,303. But it’s much more difficult (and riskier) to try to earn 7% than 5%.
If you boost your savings to $7,200 a year and earn 5%, you’ll have $ 478,359 after 30 years.
I predict that if you lower your earnings expectations and increase your savings rate, you’ll be less likely to be one of those folks retiring later than expected.
Paul Partridge is a senior partner at Sage Financial Partners, specializing lifetime income strategies and tax-free retirement. Sage Financial Partners is a Registered Investment Advisory firm and member of FINRA and the Better Business Bureau. The information above is not intended to be and should not be considered investment or tax advice.