*The following is excerpted from an online article posted on The Washington Post.
The projections are in and Wall Street analysts have pretty low expectations for how the stock market will perform this year.
While it’s impossible to predict exactly what the stock market will do, investing pros over the past several months have been reducing their expectations for what they think the stock market will return, not only in the next year, but potentially over the next couple of decades.
If those gloomier outlooks hold true, workers saving for retirement today may not get as much from their portfolios in the long term as previous generations did. Advisers say that millennials, who are decades away from retirement, will need to save more — in some cases twice as much as they were saving before — to make up the difference.
Even a small drop in market performance can make a huge difference.
If average annual stock market returns fall by two percentage points over the next couple of decades, a 25-year-old saving for retirement would need to more than double how much she is saving to make up the shortfall, according to an analysis by the Employee Benefit Research Institute.
The pessimistic predictions come at a time when younger workers are already struggling to save for retirement while they pay off student loans, face high child-care costs or deal with rising rent. But firms such as McKinsey predict that U.S. stock markets may not deliver as much as they have in years past, putting more pressure on millennials to save as much as they can.
Exactly how much millennials should be saving for retirement in light of these lower projections is up for debate. Many financial advisers recommend that workers aim to save between 10 and 15 percent of their pay. But other experts say millennials should save much more, up to nearly a quarter of their income, to avoid running out of money in old age if stock market returns fall.