[getToTheChopin]

The geometric average return of the market is 6.9%, factoring in the re-investment of dividends and inflation (i.e., the real total return).

Based on this, I'd consider a 3.5% return assumption over 20+ years to be conservative.

[tunesmith]

Man, all these numbers seem so high to me.

I'll just share this. I've recorded every retirement contribution and date since I started saving for retirement back in the late 90's. From that, I can figure APY at any time by comparing to my balance.

I had some learning experiences early on but never totally lost my shirt. I went through the dotcom crash, the finsys crash, and the more recent stuff. And I've been following Bogle philosophy for a very long time, of an allocation model with a percentage in US stocks, intl stocks, bonds, and cash.

I would love to have 3.5% real over that time period.

Now, it's possible I'm the world's lousiest investor, but I don't think so. Because I did a similar exercise pretending "what if I had just bought S&P500 on those dates?" and looked at dividend-adjusted-close. And the results there were also nowhere near as high as you'd expect.

People just can't equate "stock market performance" with what their own performance will be. You might get laid off when economy is bad and markets are down. You might have more money to invest at the top of the market, and less at the bottom, which totally screws up dollar-cost-averaging. You won't be entirely in the stock market, keeping some in bonds in cash. Your "well, I'm getting old so I should keep less in the market" decision might align with the beginning of one of the most irrational bull markets in history. (All of the above have been true for me.)

I think the only real answers are just to save like crazy, keep expenses low, and push for a better social safety net. My own retirement projections assume Social Security will only pay out at 74%, and I'm feeling the need to have a big buffer due to economic/political uncertainty, which really sucks.

[gedy]

Thanks for making me feel better about my also-weak returns and basically just trying to save money and not lose/waste large amounts either.

[neon_electro]

I have been a Betterment customer since 2014 - robo-advisor-driven portfolio since the start of my retirement journey.

Been 90% stocks/10% bonds the whole time, though the underlying basket has shifted a few times as I made decisions about how to skew the basket using Betterment's portfolio options.

8 years on, I have a total annualized return of 4.9%, with Betterment saying "All performance figures displayed reflect the actual performance of your account since its creation in terms of total time-weighted returns, net of Betterment's management fee, fund fees, and certain other fees, if applicable."

The most volatile part of my retirement journey has been how much money I am able to contribute in a given month; some of these years I've had the job security and consistent income to dollar cost average the whole year's worth of contributions every 2 weeks or every month; other years I've had to wait until some amount of money became available to do a more "lump sum" contribution.

Thank you for your comment as far as it can at least help me set expectations for how I might see this performance number continue to go up and down over time!

[Ntrails]

First, please repeat the standard mantra: past performance is no guarantee of future success.

Then tell me the 95th percentile and the median geometric returns based of fixed periods (say, copy the 20 years.)

Let us also grab what an inflation linked gov bond would have given over those same periods. Classically I would always think of pension returns as vs the risk free rate (heh, us gov credit risk) which is essentially an IL bond.

Then repeat the analysis on, say, the G8 or G20 countries. Oh, and lets do a variety of stock indexes as well. I am a great believer in diversification - so betting on the US is not my standard behaviour.

6.9% assumed return is mad for any individual. It would be mad for a DB scheme _and they at least have some risk pooling in their favour_.

But. I am hella risk averse and see the world through that lens.

[getToTheChopin]

I'll leave that analysis for you to do and share the results.

Using the historical data set for the S&P500 index, a 3.5% average annual return over a 20 year holding period is approx. 20th percentile.