According to Bill Gross, Pimco CIO & founder, “The cult of equities is dying.” Gross says that “equities have reached a dead end in terms of significant appreciation.” With recent performance of equities, bonds, and stocks, it seems as if there is now a “new normal” and Gross expects stocks to have a real return of about 4% versus the traditional norms associated with long term investing. This shift in expected return has major effects on the investment planning for many of Americans especially those who are approaching retirement. The idea of spending 4% is out the window as the return on principal in the market will not cover expenses and principal will deplete too quickly for many retirees. Gross says there are better alternatives to stocks and bonds; he mentions real assets like commodities and land. Another alternative to placing a nest egg in the market is utilizing fixed indexed annuities to generate a return on principal and create a guaranteed lifelong income stream.

For information on how to prepare for retirement in the current economic climate and how an annuity could be an ideal option, visit the Annuity Think Tank.

To read about the interview with Bill Gross, click here.

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