The Future Value Paradox

When planning your future, it seems self-evident that you should use the most accurate possible predictions. However, consider this:

When I consider a large purchase, sometimes it helps for me to think along the following lines:

I'm about three decades from retirement. The stock market roughly doubles every decade, so a dollar I spend now is worth $8 at retirement. Therefore, I shouldn't buy that $12k car because I'll be costing myself almost $100k at retirement!

This factor of eight multiplier really helps me build a visceral aversion to spending my money.

Now, if I'm careful enough with my money, my retirement could come much sooner than three decades. Suppose my frugal nature affords me a retirement in one decade. When planning for my future, I should strive to be as accurate as possible, so naturally I should frame my thinking in terms of a one-decade timeline:

I'm about one decade from retirement, so that $12k car will cost me $24k at retirement. Well, that's not so bad, so I should buy the car.

However, switching to this line of thinking would make me much less thrifty, and would greatly postpone my retirement. This leads me to what I'm calling the Future Value Paradox:

The longer the timeline I assume for my retirement planning, the more frugal I become, and thus the sooner I will retire.

So, the less accurate my prediction, the better my results!