Rate of return is a function of risk. It's kind
of unique to each individual. We have a metric or a gauge that we think certain retirees should be
at. The level of risk is really unique. There is a balance to not wanting to take too much risk
because it's great to make a greater return, but in markets like this, it's a lot
harder to stomach the losses. Whereas, if you have a well-balanced portfolio you
may not make as much in the up markets but it certainly softens these down markets. So,
as much as we want to say there's one specific rate of return like, five percent should be
my rate of return or seven percent should be my rate of return.
It really is a function of
someone's risk and unique to them as an investor. As far as the ranges of rates
of return and retirement, it should be somewhere between four
and a half to eight percent. Again, the more aggressive you are you could target
that eight percent rate of return you just have to expect more volatility and more
price change in your portfolio. The lower the rate of return expectation, the less
volatility someone should experience. Which is again a smoother path into retirement
it just might mean you don't make as much.