Just because the stock market is performing well doesn't mean investors should expect top returns. And those saving for retirement will have to try harder and adjust, as will the retirement industry itself.
So say the experts at Prudential Financial Inc., who warn there will be more and longer periods of volatility ahead and that growth will not be consistent globally.
In addition, continued strong demand for bonds will keep yields low, even as stocks running higher valuations continue to gain in a low-interest-rate environment.
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However, once interest rates begin to rise, don't expect them to go far or fast. And despite the current benefits presented by tumbling oil prices, unintended consequences, perhaps from reduced demand and slowing economies elsewhere, could inject hazards into the marketplace that are not currently being considered.
Outlining their views this week at Prudential' 2015 Global Economic and Retirement Outlook discussion, these experts said geopolitical risk, some courtesy of Russia, is injecting a lot of uncertainty into what was supposed to be a strong European recovery.
If either Europe or Japan launches a program of quantitative easing, the situation could change for the better — although various central banks following their own policies could make it hard for any sort of unified benefit to make headway.
As a result, investors, particularly those saving for retirement, will be looking for more and better ways to boost returns, according to Sri Reddy, head of full service investments with Prudential Retirement. And that's going to compel changes in the retirement industry.
In a statement, Reddy said, "This prolonged low-interest-rate and low-growth economy has investors looking for new options to generate retirement income. Things like automatic enrollment plans, auto escalation options, and enhanced defined contribution plans need to become more of an industry norm to secure retirement income for today's workers.
"With people living longer than ever before, the industry needs to continue to adjust."
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