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The title of this article appeared on Wealth The statement that investors can’t rely on the stock market for their retirement planning worked. The thought provoking statement accomplished its job, it pulled me in to read the article.

JP Morgan projects lower market returns this year and thus investors should expect a lower return environment for the next decade. The article went on to highlight the scenario of a 40-year old with a household income of $100,000. In this scenario, the JP Morgan study indicated this family should have $260,000 saved for retirement. The scenario assumes a gross saving rate of 10% ($10,000) going forward into a 401k or other retirement account and a rate of return of 6% in pre-retirement and 5% in post-retirement. The example has the head of household retiring at age 65 and this scenario will give the household $38,000 of income replacement in retirement. The article went on to say if the rate of return falls by .5% to 5.5%, this family should have saved $310,000 by now.

If you are dizzy when you get to this paragraph, I feel your pain. So many questions unanswered in such a simplistic example. How is the portfolio split between stocks and bonds? What are the underlying asset classes in the portfolio? Does the couple want to leave an inheritance to the children? Does this include a long-term care event in the planning? What COLA projection is being used for Social Security? How does an 8% investment return impact the example if the portfolio gets tilted to other asset classes due to a low return environment for US stocks? How would a high inflationary environment impact the portfolio? What is the maximum amount this family can spend in retirement?

The bottom line is I let a headline pull me into an article that was too simplistic to have any value other than highlighting the need to save for the golden years. However, this read reinforced the need for the planning services we provide for our clients. It reiterated to me the importance of working closely with our clients on a regular basis to review the portfolio and its return so we achieve their planning goals and address their concerns.

If you need help with your planning goals, do not hesitate to call.

Peter B. Smith is a Family Wealth Advisor at the Planning Solutions Group in Fulton, MD ( and is an Annapolis resident. He can be reached at 301-543-6008 or by email at