Is there enough time for a comeback?

Perhaps you’ve seen this New York Times tool by now. It helps you calculate what would have to happen for your retirement fund to get back to where it was at its zenith.

According to the various scenarios I entered, in my case I would have to get a 5.2% annual return — starting today — to get back to my 2006 state by the time I retire. To get to the point where I’d calculated the resources I’d need to retire, I would need roughly a 10 percent return.

If I were much younger, this isn’t a problem. But it’s here where the usual financial advice isn’t making sense and doesn’t apply to a significant number of Americans — essentially those who are within 10-15 years of retirement. Sure, historically the market comes back given the right amount of time. But there isn’t enough time left for these people. They are looking at a significantly reduced standard of living, and there’s virtually nothing they can do about it.

It’s that reality that few economic experts are addressing or acknowledging. Might it soon be time to warn them that they need to accept a lower standard of living? Is that politically wise for them? Should younger people plan on having mom and dad move in?

(h/t: Marty Moylan)

  • Carolynn

    I’ve been wondering why no one is talking about this. I keep hearing about compounding returns, and the need to keep putting money into various plans (impossibility for me), yet NO ONE has addressed the fact that somehow we need to get back to where we were before the “crash” before we can see any growth. And up until now, I hadn’t seen anything/anyone address this. I even sent a question in to Suze Orman but so far no one’s called. LOL.