32 • MARTIN H. RUBY
back the money you had lost when the market dropped. So those gains really didn’t reflect forward progress, did they? In fact, it’s even less progress than you think. What do you think your 401(k) earned, on average, from 2000 through 2009, if it was invested in “the market”? Four percent? Three percent? The answer is worse than you think. It’s negative 1 percent. That’s right. For the entire decade, you lost about 1 percent per year. That is a frightening way to grow your retirement savings. The experience over the rest of the century hasn’t been much better. From 2000 through the end of 20 2 2 , the S&P 500® has re- turned an average of more than 6 percent per year. Not terrible (at least you didn’t lose money), but also possibly not enough to grow your account value in a meaningful way. And remember, that 6 percent is your growth before you pay the fees inside your 401(k) or IRA, and of course before the IRS takes out a chunk for taxes. No one is going to successfully retire on an account that’s growing in the low single digits. You need meaningful growth to fuel your account. Why It Hurts So Much When the Market Crashes Here’s a very concrete example of why most savers weren’t cel- ebrating when the market rose 28 percent in 2003. Below is a chart of the growth needed for recovery when the market drops:
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