Warning: Retirement disaster ahead

The Wall Street Journal reports that many Americans are “hurtling towards a retirement disaster” — despite a rally in stock and bond markets. That’s the conclusion of Research Affiliates, an investment management firm.

What’s more, big pension funds don’t know this, according to the article.

The typical big pension fund is expecting to earn 7-8 percent a year. However, the returns estimated by Research Affiliates fall quite short of the expected...

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The Wall Street Journal reports that many Americans are “hurtling towards a retirement disaster” — despite a rally in stock and bond markets. That’s the conclusion of Research Affiliates, an investment management firm.

What’s more, big pension funds don’t know this, according to the article.

The typical big pension fund is expecting to earn 7-8 percent a year. However, the returns estimated by Research Affiliates fall quite short of the expected returns.

Returns from stock funds come from four places: dividends, earnings growth, inflation and changes in valuation. Taking all four into consideration, Research Affiliates estimates a long-term return of 5.2 percent. The picture is worse for bonds, with an estimated long-term return of 2.5 percent.

The bottom line: People will have to save a lot more for their retirement.

This story is part of our daily DorobekINSIDER Must Reads. Be sure to check out the full list of stories.

THRIFT SAVINGS PLAN TICKER

May 25, 2022 Close Change YTD*
L Income 22.6163 0.0457 -3.32%
L 2025 11.4047 0.0389 -6.04%
L 2030 39.2730 0.1883 -8.58%
L 2035 11.6917 0.0617 -9.48%
L 2040 43.8752 0.2521 -10.33%
L 2045 11.9249 0.0736 -11.10%
L 2050 25.9420 0.1706 -11.80%
L 2055 12.5294 0.0961 -13.56%
L 2060 12.5286 0.0961 -13.56%
L 2065 12.5276 0.0961 -13.57%
G Fund 16.8784 0.0014 0.65%
F Fund 19.1400 0.0637 -9.33%
C Fund 60.4217 0.5666 -12.91%
S Fund 63.7477 1.4022 -18.83%
I Fund 34.4312 -0.0204 -12.73%
Closing price updated at approx 6pm ET each business day. More at tsp.gov
* YTD data is updated on the last day of the month.