If you want a fun story of making terrible long term choices based on faulty rate of return numbers, look no farther than MLB player Bobby Banilla (https://en.wikipedia.org/wiki/Bobby_Bonilla).
The Mets wanted to get rid of Bobby in the year 2000 but owed him $5.9M. Mets owner Fred Wilpon thought it a good idea if he asked Bobby to defer payments on that $5.9m for 11 years. Fred would invest that $5.9M today and make out in the black. Fred would just turn around and get a 10% return from his buddy Bernie Madoff and have over $16M in 11 years.
Hell, no! Google for "unfunded pension liabilities". 9% is wildly unrealistic for those estimates as well, but the folks who negotiate those hope to be retired and gone far away by the time when those obligations come due for large numbers of retirees.
The Mets wanted to get rid of Bobby in the year 2000 but owed him $5.9M. Mets owner Fred Wilpon thought it a good idea if he asked Bobby to defer payments on that $5.9m for 11 years. Fred would invest that $5.9M today and make out in the black. Fred would just turn around and get a 10% return from his buddy Bernie Madoff and have over $16M in 11 years.
Lets just say that story doesn't have a happy ending. Bobby Banilla will get paid $29.8M dollars over 25 years for a season he never played. http://fivethirtyeight.com/features/the-bobby-bonilla-retire...