Armstrong and Tom Idzorek, chief investment officer and director of research at registered investment advisor Ibbotson Associates, cautioned also against relying solely on historical return data when considering retirement security.
"I don't think you can use a 5% return going forward on a bond portfolio," said Armstrong. He prefers to consider various returns within a Monte Carlo simulation (a computerized mathematical technique that allows people to account for risk in quantitative analysis and decision making) to determine what return an investor requires in order to be secure, he said.
Idzorek agreed, saying one should consider the likely return given the current environment. Inflation is another consideration, he said.
"Looking forward five years, it's hard to imagine inflation isn't coming," he said. Those in the distribution stage, might consider investing some portion of their portfolio in Treasury Inflation-Protected Securities or real estate, he said.
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