Improving Retirement Outcomes
Americans are living longer and need their retirement savings to last longer. But DC plan sponsors and participants already have the right tools to significantly improve retirement outcomes.
Americans are living longer and need their retirement savings to last longer. But DC plan sponsors and participants already have the right tools to significantly improve retirement outcomes.
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Each factor alone would need a significant change to make a notable impact. But modest changes to all four factors may deliver better results while also being a more practical approach for plan sponsors and participants.
Participants Can’t Afford to Plan for the Average: While the current average life expectancy for a 65-year-old is about 84 years,1 that average keeps rising. And it’s just the average, which means that half may live even longer.
1 As of June 30, 2013
Capital Markets Engine initial conditions as of March 31, 2013
In present-day dollars
Source: Employee Benefit Research Institution (EBRI) and AllianceBernstein
For illustrative purposes only. This hypothetical illustration is not intended to depict the performance of any particular security or investment. Savings totals do not reflect any fees/expenses associated with your plan. The accumulations shown above would be reduced if these fees had been deducted. Income taxes are due upon withdrawal. Rates of return may vary.
AllianceBernstein’s Capital Markets Engine is a proprietary model that uses our research and historical data to create a vast range of market returns, taking into account the linkages within and among the capital markets (not AllianceBernstein portfolios), and factor in a reasonable degree of randomness and unpredictability. It uses a Monte Carlo model to simulate 10,000 plausible paths of return for each asset class and inflation, producing a probability distribution of outcomes. It projects forward-looking market scenarios, integrated with an investor’s unique circumstances and taking the prevailing market conditions at the beginning of the analysis into account. The forecasts are based on the building blocks of asset returns, such as yield spreads, stock earnings and price multiples.
An important assumption is that stocks will, over time, outperform long-term bonds by a reasonable amount, although that is by no means a certainty. Moreover, actual future results may not be consistent with AllianceBernstein’s estimates of the range of market returns, as these returns are subject to a variety of economic, market and other variables. Accordingly, this analysis should not be construed as a promise of actual future results, the actual range of future results or the actual probability that these results will be realized.
