Weekend Reading: The Seven Great Challenges to Retirement Plans

This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
Weekend reading seven great retirement challenges Weekend reading seven great retirement challenges
Weekend Reading

Your retirement strategy should be built to withstand ongoing risks such as market volatility and sequence of returns impact, but today’s retirement landscape also brings its own significant challenges.


Five of the seven featured here are as follows:

📌 Historically high equity valuations: The Shiller CAPE 10 suggests future real returns for U.S. equities of around 3.2 percent, which is lower than historical averages.

📌 Historically low bond yields: Bond yields have dropped, affecting the traditional 60 percent stocks/40 percent bonds portfolio. Expected returns are around 4.8 percent, lower than the 8.5 percent or 9.8 percent seen historically.

📌 Increasing longevity: Odds are in your favor of living longer. This increases the need for long-term care and an income that can last your lifetime.

📌 Lower GDP growth due to rising debt: High levels of government debt-to-GDP ratio can negatively affect economic growth, leading to higher taxes. Such conditions could impact future corporate profits and equity returns.

📌 Failure to fully fund Social Security/Medicare/Medicaid: Government programs face underfunding issues, which could result in benefit cuts, tax increases or other adjustments.

You may feel that retirement is easier today with a rockin’ stock market and sky high interest rates, but that doesn’t mean it’s time to rest on your laurels.