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Commentary

Savings, Not Returns, Key to Secure Retirement

A low-return outlook and increasing lifespans mean investors will need significant savings rates to fund retirements.

By David Blanchett, Michael Finke, and Wade Pfau

Investors often need to make assumptions about future asset returns in order to estimate how much they may need to save today in order to meet retirement-spending goals. We generally look to the past to project the future, but higher prices for stocks and bonds today suggest that investors can likely expect lower returns. Higher-earning Americans are also living longer, increasing the cost of funding a retirement income goal. It is important to recognize the planning implications of funding a longer retirement in a low-return environment.

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