Retirement savers’ ability to consume in retirement is a function of how much they save, how long they invest, and what those investments return over the lifecycle. In this paper, we examine the rate of return needed to deliver a comfortable retirement based on current savings rates as well as intelligent ways to construct portfolios to achieve this rate of return. Based on reasonable long-term return assumptions, defined contribution portfolios as frequently constructed today are unlikely to achieve this required rate of return. By relaxing existing constraints and taking advantage of well-known and broadly accepted investment themes, this required rate of return can be achieved with an exceptionally well-diversified portfolio, which may also lead to a more consistent portfolio across different economic environments.
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