Consistently getting a return of 8 percent — the top rate by which your benefits can potentially increase if you wait to claim — will pose a challenge for any investor, said financial advisor Thomas H. Yorke, managing director at Oceanic Capital Management in Red Bank, New Jersey.
“If you think you can do better than that, I think you should be a hedge fund manager,” Yorke said. “Not only on a risk-adjusted basis you’ll likely be way underperforming, but we’re just humans and we’re subject to all these biases.”
While you may be able to beat that 8 percent return a few years in a row, you could run into another year like 2008, Yorke said.
And the closer that sharp downturn is to retirement, the harder it is to make up. If there’s a 50 percent pullback in the market, for example, you may need a 100 percent return to get you back to where you need to be, Yorke said.
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