Ryan explains estimating rate of return in retirement.
Estimating Rate of Return
How do you estimate future rate of return in retirement? We like to look into our crystal ball to know exactly what will happen in the future. No, unfortunately this isn’t true and crystal balls don’t really work. However, a tool we can use is to look to the past for patterns and behaviors of the market within different sectors across the economy. The process is called “Capital market assumptions”, where you attempt to project what each asset class will do for any given year based on past evidence.
This can help us to make educated decisions based on information that we know for certain, historic data. We consult with many of the best minds in the industry in order to get more accurate information and allow for a conservative approach that gives our retirees retirement plans they can rely on even if those assumptions end up incorrect.
