This blog, “Can Young Workers Afford to be this Conservative?” presents evidence that the newest generation of workers is proving to be more risk-averse than one would have ever guessed. This might be nothing more than another interesting “historical” anomaly were it not for the size of its impact on this generation’s future retirement readiness and an import lesson for us ALL.

We constantly find ourselves pointing out the inefficiency of an emphasis on saving more while outsourcing investment performance to an age-based formula, without regard to a consideration of what the market is actually doing. Without adequate performance, it does not matter how much one saves as you may well find yourself outliving the amount set aside.

Consider this example. A 35-year old worker, making $45,000 a year has purchased a HORIZON™ Adaptive Asset Allocation™ subscription, and is currently enjoying a 12% investment return on average, per year. Between her and her company, she contributes 6% to her 401(k) each year. By the time she retires at age 65, she will have amassed nearly $1.2 million.

Now consider a 25-year old Millennial. Assuming a $35,000 starting salary but with TWICE the savings percentage as our worker above (12%), and making a generous—for a cash investment—4% return. He will have $659,000 waiting for him at age 65, barely more than half the amount of our other worker, having saved (perhaps painfully) MORE and having worked ten years LONGER.

Remember, the concern is the return. While you must put away money for retirement, just saving MORE is not the answer. Success or failure hinges on an investment return high enough to make the most of the amount you are saving. HORIZON™, with its historical 13% average annual investment return, is poised to help you—no matter what your age. To find out where your current strategy has you headed, download our Excel Retirement Goal Calculator available on our website.

If the HORIZON™ service is not yet available at your company, or if there is someone you know who could benefit from consistent and effective investment analysis, contact us to investigate the possibilities.