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Warning: Retirement disaster ahead
Thursday - 10/28/2010, 2:07pm EDT
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.