How Much Should DC Savers Worry About Expected Returns?

August 03, 2016
  • Contributors:

    Antti Ilmanen, Matthew Rauseo, Liza Truax
  • Topic:

    Defined Contribution Plans

The Journal of Retirement

DC savings analyses typically anchor on long-term stock and bond returns when estimating retirement income. We make the case that these historical returns may not be achievable in the future, and quantify the impact this could have on savers’ retirement income replacement ratios (RR). We find that required savings rates nearly double when return prospects are reduced by ~2% to be more in line with current yields.



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