There are several aspects of your retirement plan that are beyond your control. Things like investment returns, life expectancy, future tax rates, and inflation all will have an effect on whether you have enough money to retire comfortably. Since you can't fully predict any of these variables, here are some ways to attempt to hedge against them:
Diversify and minimize investing expenses. You should allocate your retirement savings across a diverse set of investment choices. This way, if one asset drops in value, the odds are low that the other asset classes will also decline. Additionally, focus on funds and accounts that have low expense ratios. You can't always predict investment returns, even with the most diverse portfolio. But you can predict expenses. Make them as small as possible.
Avoid relying too much on one source of income. Much like the diversity you create with a properly allocated set of investments, you should create several different sources of retirement income. It's okay to expect some help from Social Security and your former employer if you have a company pension. But don't put all your eggs in those baskets. Make sure you have your own retirement accounts as well.
Pay some taxes now and some later. Many people debate whether taxes will be higher in the future than they are now. I focus on ensuring that I get some tax breaks on my retirement savings now and some in the future. The quickest way to achieve this tax diversification is to contribute after-tax dollars to a Roth IRA, so you can take the money out tax-free in retirement. Also, defer income tax on some of your retirement savings using a traditional 401(k) or traditional IRA. By paying some taxes now and some later, you'll avoid getting slammed by taxes at any one time.
Take care of yourself and expect to live a long time. Life expectancies should continue to rise as a result of medical advances. Since we can't accurately predict how long we'll last, it's prudent to estimate a long life expectancy when calculating retirement savings needs. Also, take steps to maintain good health by eating right and exercising. When you're healthy you will experience fewer medical expenses and maintain the ability to work, at least part-time, to provide for yourself if needed.
Learn to live within your means. The best hedge against the retirement unknowns is to live within your means and save more. Learning to reduce your debts and expenses will benefit you well into retirement. The bigger nest egg you have, the better equipped you will be to handle any of the unknowns that come with retirement planning.
Philip Taylor is the author of 104 Ways to Save Extra Money. Read his popular blog, PT Money: Personal Finance for more insightful money tips, like his recent suggestions for the best online checking accounts.