Which statement about changing the assumed rate of return and inflation rate in retirement calculations is accurate?

Changing the assumed rate of return and inflation rate in retirement calculations is crucial because these variables significantly impact how much capital you will need to retire comfortably. When you increase the assumed inflation rate, for example, the purchasing power of your savings decreases over time, requiring you to accumulate a larger capital base to maintain your desired lifestyle in retirement.

Similarly, if the assumed rate of return on investments is lowered, it means that the growth of your savings will be less than previously anticipated. As a result, you'll need to save more money to reach your retirement goals. Overall, adjusting these assumptions directly influences the overall financial strategy for retirement, often leading to the conclusion that one must increase the amount of capital needed to counteract the negative effects of higher inflation or lower expected returns.