GOLDEN VALLEY, Minn.- A new study found that investors saving for retirement may have unrealistic return expectations for their nest eggs. Coupled with the underfunded state of many preparing for retirement, this could further pressure those planning for their “golden years”. Dan Ament, Financial Advisor with Morgan Stanley joins us to discuss.

  • U.S. Investors expect an annual return average of 8.5% after inflation - Millennials are even more optimistic, with those between the ages of 18-34 excepting long-term average returns of 8.7%. Financial Advisors indicate a 5.9% return would be more reasonable. (Natixis Global Asset Management research)
  • Understand the tradeoff between Risk and Return – Traditionally, low levels of risk are associated with lower rates of return. Conversely, if you are seeking a higher return, you should also be willing to accept greater volatility or risk of capital loss. Finding a balance that fits your risk tolerance as well as your financial objectives is important. There is no perfect answer however a simple question would be to ask yourself …”How would I react if my portfolio was down 10%, 15%, 20% or more in a given year?” Your answer will likely weigh on what investment mix may best fit your situation. Conversely, one cannot assume that holding cash will generate the returns needed to help you achieve a comfortable retirement.
  • Take 30 minutes and begin planning for the next 30 years - Assess your overall portfolio investment mix and the amount you are saving each year as well as how much are you capable of saving if needed. Contemplate your financial goals which may include education for your children, retirement dreams or a bucket list goal. Next, utilize available planning tools or consult an advisor to assist in creating a roadmap for your future to determine if you are on course or potential stuck at the rest stop on the highway to retirement

SOURCES, RESOURCES & EXCERPTS - Investors expect an 8.5% return