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401k Calculator Question
Posted on 10/6/25 at 3:41 pm
Posted on 10/6/25 at 3:41 pm
Playing around with a few 401k calculators. They ask what rate of return you expect until you retire. If my account is at 15.34% ytd, 24.73% for 3-year, and 16.38% for 5-year...what is a safe, conservative number to use in calculations? I've looked for the overall rate of return since I opened the account but am not having any luck finding it...
4
Posted on 10/6/25 at 3:47 pm to tigergal918
I always use 6% to be conservative
Posted on 10/6/25 at 3:48 pm to Tifway419
By no means trying to argue because I know nothing, but if the average performance of the stock market is 10% since inception, why only 8%? (I'm really trying to learn)
Posted on 10/6/25 at 3:57 pm to tigergal918
You said conservative, which IMO is how you should do it.
Posted on 10/6/25 at 3:58 pm to tigergal918
Because if you plan for 8 and perform 10, then it’s icing on the cake. If you plan for 10, and perform 8 then it’s back to work again.
Posted on 10/6/25 at 4:03 pm to Tifway419
Would that number change if I'm invested aggressively, as I have a healthy guaranteed pension?
Posted on 10/6/25 at 4:06 pm to tigergal918
If you can swing it and are young, dump as much as you can into it now. Compounding returns are where you really build your wealth, not just your contributions.
Posted on 10/6/25 at 4:08 pm to Tifway419
Haha, not as young as I'd like. Just made 44 and retiring at 60 is our goal.
Posted on 10/6/25 at 4:22 pm to tigergal918
quote:
Just made 44 and retiring at 60 is our goal.
Then maybe you are counting your pension chickens before they hatch.
A lot of people use a 4%-6% real rate, meaning an inflation free rate. The historical inflation free rate was 7.7% a few years back, I don't know what it is now, but at 7.7% your real purchasing power would double every 10 years.
It's best to use a conservative rate but back it up with a doomsday scenario, like 2% inflation free. Calculate it both ways and develop a plan for both scenarios. You've got time to make both of them work out.
If the real return is 10% instead, well, I think you'll figure out how to react to that.
Posted on 10/6/25 at 5:17 pm to tigergal918
quote:
but if the average performance of the stock market is 10% since inception, why only 8%
It’s not the average that gets you. It’s the single 40% down year once a decade that erases years of gains.
Posted on 10/6/25 at 5:39 pm to tigergal918
I run 10% for average and 12% for giggles.
Posted on 10/6/25 at 5:42 pm to lsuconnman
quote:
It’s not the average that gets you. It’s the single 40% down year once a decade that erases years of gains.
Allocation and discipline solves that problem.
Posted on 10/6/25 at 5:58 pm to tigergal918
quote:Reversion to the mean. It has been outperforming for years there is some likelihood it may underperform at some point. I'd rather plan conservatively and adjust to more optimistic outcomes.
stock market is 10% since inception, why only 8%?
This post was edited on 10/6/25 at 5:58 pm
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