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The Next Decade Will Be Ugly for 401(k)s

New report suggests defined-contribution plan participants need to start saving more, now, to have the standard of living they want in retirement.

By Suzanne Woolley, Bloomberg | Updated on October 26, 2016

It doesn’t seem like much to ask for—a 5 percent return. But the odds of making even that on traditional investments in the next 10 years are slim, according to a new report from investment advisory firm Research Affiliates.

The company looked at the default settings of 11 retirement calculators, robo-advisers, and surveys of institutional investors. Their average annualized long-term expected return? 6.2 percent. After 1.6 percent was shaved off to allow for a decade of inflation, the number dropped to 4.6 percent, which was rounded up. Voilà.

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