How much will healthcare really cost in retirement? How often do professional fund managers beat the market? We dig into six eye-opening statistics and explain the lessons they offer for investing, planning and preparing for retirement.
Episode Transcript:
Intro/Closing: 00:03
Welcome to the Real Talk Retirement Show, where we explore the financial side of retirement and beyond. Whether you’re currently retired or planning for the future, we offer real, relatable conversations about money and personal finances. Most importantly, we dive into all these topics using Real Talk. Now, let’s get real about your money and your retirement.
Brian Graff: 00:28
Welcome everyone to another episode of The Real Talk Retirement Show. We are Brian Graff and Tracy Burke from Conrad Siegel with you as always. You know, if you’ve ever searched the internet for retirement advice, you’ve probably discovered a few things. First, apparently everyone is a financial expert. Like other topics you may research, you know, you’ll find lots of different opinions. And second, many articles will try to convince you that you can retire comfortably if you just buy this one stock or this one annuity, you know, this one miracle investment, if you will. And they’re really likely probably trying to sell you something.
Tracy Burke: 01:05
Brian, are you trying to say that you know we can’t believe everything we read online? Is that what you’re saying?
Brian Graff: 01:10
This is true, Tracy. That’s exactly what I’m saying. Sorry to break it to you. Yeah.
Tracy Burke: 01:13
Yeah. Well, fortunately, there are a lot of smart people in finance that have been doing some real studies, uh, especially of investor behavior, for quite a few decades now. So a lot of studies are out there and they’ve analyzed millions of accounts, thousands of different funds and other investments, and really decades of market history. So today we’re gonna ignore those opinions that are out there, and obviously there’s lots of them, and we’re gonna look at the cold, hard facts and look at the research.
Brian Graff: 01:42
That’s right, Tracy. So by the end of this episode, we’re gonna share six statistics that could help our listeners focused on what’s most important as you think about retirement planning. Uh, whether you’re currently in retirement already or you have aspirations to get there someday, as we all should. Um, and besides looking at the data, we’ll also focus on some key takeaways. And Tracy, why don’t you go ahead and get us started with the first one?
Tracy Burke: 02:05
For sure. So the first one, uh, and we’re gonna start with a few of the investment related ones, and then we’ll transition to some retirement-focused ones here in a little bit. But the first one is an annual study that’s done by uh the SP Global Organization. So that’s a company that runs many indices in the investment world, including, you know, a lot of uh folks probably have very familiar with what we refer to as that famed SP 500 index, right? That’s a company that that does that. Uh so by the way, Brian, um, bonus points, if you can share with our viewers what SP stands for.
Brian Graff: 02:42
Well, at dinner time, I’m pretty sure it stands for uh salt and pepper. But uh, in this case, Tracy, for what we’re focusing on today, I’m gonna go with Standard and Poor’s, a major financial data company.
Tracy Burke: 02:52
You got that right. So, Standard and Poor’s, so that company, they do analytics every year of a lot of uh different investment data points. Uh, and a lot of it’s comparing how certain mutual funds and ETFs or exchange traded funds, how they perform against each other and their respective indices. And they call this study, they call it their SPIVA scorecard. Now, hoping you don’t quiz me, Brian, on what SPIVA stand for because I have no idea. Um, so the most telling statistic in this study is the one that compares performance of all large cap funds against their famed SP 500 index. So large cap mutual funds or ETFs that are out there, managed funds against the index. And using data through the end of 2025, the most recent calendar year, they found that roughly 79% of those large cap funds out there, and that’s the same asset class, apples to apples comparison as the SP 500 index, about 79% of those large cap funds underperformed the actual SP 500 index. Um, so if we expand that to the past 10 years, that number actually increased to 86% underperforming and further expanding to the last 15 years, nearly 90% of large cap funds in the universe underperformed the SP 500 index. So that’s pretty incredible statistics and the probability. And really, I think there’s a few reasons for it. Uh, one that comes to mind that we’ve talked about in the past uh and and comes up quite a bit is fees, right? Uh, you know, fees are often part of that challenge. And and another organization, Morningstar, which is a date, what we call a data aggregator company, and and we’ll return to Morningstar here shortly. The average actively managed large cap fund has an expense ratio, meaning what is the cost and the percentage of assets the fund company charges the investor to manage it and be in it, uh, of between 60 and 82 basis points, which again translates that’s to 0.6 to 0.82 of 1% is what that uh expense ratio is.
Brian Graff: 05:15
Yeah, pretty big numbers. And I know we don’t have uh too much time to dig very deep into this, Tracy, but just quickly to point out to our listeners that there are really two types of funds out there, whether we’re talking about mutual funds or ETFs. So first we have what we refer to as index funds, those that really simply try and track the related index, like the S P 500 index fund we’re talking about. Uh the performance will or at least should mirror that index. And with those types of funds, those index funds, your expense ratios will be low. And usually we expect them to be in about the three to five basis point range, which is 0.03 to 0.05%, very low. And then you also have what we refer to as actively managed funds. So this is when you have a fund manager out there that isn’t trying to match the index, but instead they’re trying to beat the index by picking the stocks they believe will do so and usually engaging in market timing, you know, always trying to figure out the best time to get in and out of certain stocks or the market. And, you know, due to this strategy and this active management, the cost or the expense ratio uh tends to be considerably higher. And in that same 60 to 82 basis point range you mentioned, Tracy.
Tracy Burke: 06:28
Yeah, what well said, Brian, um, you know, I think the key point again is it’s very difficult for an active stock fund manager to outperform the index. And that SPIVA study that we referenced again shows that 90% of them underperform over the long term. So uh big underperformance there, a big subset of those do. Uh, and it’s also impossible to predict which 10% will win the race. And they often change over time uh without consistency. So I think the takeaway here supports you know Conrad Siegel’s longtime belief that in the equity or that stock space, we believe that index funds, as you describe them, Brian, you know, they provide the best chance for the most success over the long term long term.
Brian Graff: 07:15
Yep, for sure.
Brian Graff: 07:16
And that takes us to statistic number two. So this second statistic that we’re gonna cover today also comes from the the SPIVA study and focuses on the top performing funds. So this study sliced performance of funds into four quartiles or sections, uh, the top 25%, then those funds between 25 to 50 percent, between 50 to 75 percent, and then the lowest quartile between 75 to 100%. So the funds that are in that top 1% had the greatest outperformance to the index, and the ones labeled as 100% underperformed the most.
Tracy Burke: 07:55
So so Brian, with that there, you know, it sounds like the easiest solution seems to be well, geez, just pick a top quartile fund and you got yourself a winner, right? Is it that easy?
Brian Graff: 08:05
Yeah, well, that seems pretty logical, Tracy. This FIVA study shows that very few top performing funds remain top performers in the future, where only about 29% of the top quartile large cap funds stayed in that top quartile for the following two years. So this means that the the vast majority of those types of funds transition in and out of that top quartile, which means yesterday’s winner, rarely tomorrow’s winner. Chasing last year’s best fund often disappoints. And we call this chasing past performance. So I think the the key takeaway here is that you know you really want to focus on the long term, as we always say, and not chase the hottest performing investment. As quite often, the reason it’s ranked near the top right now is because it’s already had its good run. And we know that investments go in waves. Many many investors chase those top performing funds and then ride it down in the cycle, and then they want to get out. Successful investors, on the other hand, they’re gonna buy low and they’re gonna sell high.
Tracy Burke: 09:06
That’s absolutely right, Brian. Good. Um, so moving along, number three, item number three here. Uh this
Tracy Burke: 09:12
is one that I’ve been tracking for a long time. So uh every year, the organization Dalbar comes out with a study on investor behavior. And historically, those results share or showed that the average investor has historically earned significantly less than the investments that they own, primarily because of poor timing, uh, and that involves buying high and selling low. Again, that’s the opposite, of course, what we want to do. Um, so that exact gap differs and varies from year to year, of course, and by asset class, but the finding that’s remained consistent within their study across Dalbar’s uh long-term research, again, is that uh the average investor has earned less than the actual investments that they’re in.
Brian Graff: 10:04
For sure. And let’s look at the data from the past few years from this study. So in 2025, the survey reflected that the average investor underperformed by 0.72%, so nearly three-quarters of one percent. And that on the surface, they might not sound like a huge number, but it really is impactful, and the dollars can be substantial. And if we back that up just one year to the calendar year 2024, the gap was roughly 8.5%. Again, that’s for 2024. And you remember, may remember that that year the S P 500 returned roughly 25% alone. So that’s a very high return year, and that will definitely skew the data just a bit. But over the long term, of course, performance isn’t as stellar as it’s been in recent years, but the trend has always been that the average equity investor lags the index. So why is that, Tracy?
Tracy Burke: 10:57
Yeah, and a common theme is we’ve previously just talked about it. A lot of this is due to market timing, buying at the right, you know, or selling at the right, uh, I’m sorry, at the wrong time, of course, and then investor behavior, right? Um, we’ve talked about this, these factors before, and this study supports that fact that just many investors often get in and out of the markets at the least opportune times. It’s somewhat human nature. Uh, people tend to buy high and sell low. That’s obviously the opposite. Uh, and while, of course, this isn’t always the case, there are a significant number of folks that do it. So then the question becomes well, what should we do? Well, pretty simple, right? Let’s not time the market. Um, so you know, what are some alternatives? You know, finding low-cost ways to invest and focus on that long-term. And that should sound familiar to our listeners because that’s been a common theme of our conversation. Uh, so so much of investing, of course, is based on that behavior and good behavior. And it’s really not as easy as it sounds. Um, you know, years ago at Conrad Siegel, we we created what we call an investor success checklist. Basically, it’s just a list of um you know uh of items out there that focus on behavioral elements of investing and what creates or what um is sort of you know uh positive attributes of successful investing. So we’re gonna go ahead and put that out in the show notes here for our viewers.
Brian Graff: 12:30
Yeah, I think that’ll be valuable to a lot of our uh listeners and viewers. And um, yeah, the best thing you can really do when it comes to investing decisions is keep the emotions out of it. We’re all emotional people, but it’s still something that you probably want to put on the back burner while you’re looking at your portfolio.
unknown: 12:44
Yeah.
Brian Graff: 12:45
Which brings us, Tracy, to statistic number four. So here we’re going to transition from investment stats to retirement planning data. And this next one comes from Fidelity. Every summer, Fidelity does a study called the Retiree Health Care Cost Estimate. And in 2026, Fidelity estimates that the average 65-year-old retiring this year can expect to spend roughly $185,500 on healthcare throughout retirement. And that’s an increase of 7.5% over the previous year. A few caveats. I want to mention that this is a per person number. So if you’re a married couple, double that. And that would be roughly about $370,000 during the lifetime of that married couple. Uh, this figure also does include healthcare premiums, including Medicare and all ordinary out-of-pocket healthcare expenses. However, this number excludes certain things like long-term care costs, meaning that if that’s something you’re going to need or you need to go into a nursing home at some point, that’s going to be in addition to the numbers we just mentioned.
Tracy Burke: 13:51
Well, Brian, that’s that’s quite sobering, isn’t it? For sure. Yeah. Yeah. So here’s some of takeaways, or at least my takeaways, when hearing that that data. Um, now, first of all, Medicare isn’t free. Um, so many folks feel that once they hit Medicare age, much of those healthcare expenses become covered without much money going out. Uh now it’s true that for Medicare Part A, you don’t pay a premium, but keep in mind that you’ve been paying part A premiums throughout your work and career. So you’ve already paid for it, it’s, but it’s not certainly not free. Uh, but in retirement, when you’re taking uh Medicare or uh partaking in Medicare, there are monthly premiums for part B, uh, also for whatever supplemental plan you are on, um, and then also for any prescription plan you may be on. So all those certainly add up. Um, and and the other, I think, takeaway is, and this is probably a no-brainer to a lot of folks, but healthcare really is one of the largest expenses retirees will, of course, incur. Um, largely depends on your situation as well as goals and lifestyle, but it’s certainly a big chunk for most folks. Uh, so that means you really need to factor it in to your retirement plans and be prepared for how you’re going to pay for it. And then finally, uh, don’t forget about inflation. You know, it’s becoming uh here at the current time a little bit more sticky with us. Uh, but into the future, medical costs are only gonna go up.
Brian Graff: 15:25
Well, now that you’ve thoroughly depressed most of us, Tracy, shall we move on to the next one? All right. So that gets
Brian Graff: 15:30
us to statistic number five. And staying with Fidelity here, they did another study earlier in the year called the 2026 State of Retirement Planning Study. And the end result was an improvement from the previous year’s study. In 2026, 72% of those surveys expect to retire on their own terms, which was a 5% increase from the previous year. Uh, the study also reflected that more people have a plan in place to meet their retirement goals than they did in previous years’ studies. A few other key points from the study compared to previous years. Uh, first, more folks responded that they intend to transition into retirement instead of going cold turkey. So the percent of folks in this survey who indicated this was 61%, another uptick from the previous year. And this could mean that, you know, folks may phase out of their job if that’s an option, you know, working just less hours than they did previously, or maybe they pick up side gigs or hustles in early retirement, perhaps even finding a different and slower-paced career. Uh, the survey also pulled people on what concerns them the most as they move into retirement. Top responses include, Tracy, like you just mentioned, inflation, no surprise there, and being able to pay for monthly bills and paying for those pesky emergency expenses.
Tracy Burke: 16:50
Well, you know, it’s certainly good to hear that there is an improvement in a few of those metrics from the previous uh study or the previous year, uh, particularly in the increase of those who expect to retire on their own terms. You know, that that’s very positive. Also refreshing to hear that was likely due to more or better planning. So, you know, Brian, you and I stressed that importance of planning for all stages of your financial life. So it’s refreshing to see some of those statistics that actually show maybe some people are actually doing that.
Brian Graff: 17:22
Absolutely, yeah.
Tracy Burke: 17:23
Yeah. And I would say, you know, the Fidelity survey, the other thing that I noticed from that one showed that 83% of those with a financial plan in place, they feel more confident about their financial future compared to the flip of that, only 38% of those uh without a financial plan. So that’s quite a disparity. And and bottom lines, we keep reinforcing, do some planning in advance.
Brian Graff: 17:50
Yeah, makes makes perfect sense. Yep.
Brian Graff: 17:52
And statistic number six, this last one is again from Fidelity and covers the amount folks need to save for retirement. Uh, the headline data point from the survey is that the average retiree in 2026 feels they need to have roughly $1.4 million saved in order to retire comfortably. Of course, this is going to vary widely and really depends on lots of factors, uh particularly lifestyle. Uh, but they also provide some targets of annual salaries saved at certain age milestones. So, for instance, at age 50, uh the study shows you should have about six times your annual salaries saved. And if you do the math on that, that means if you make about $80,000 a year at age 50, multiply that by six, and you should have at least $480,000 saved by that point to be considered on track. At age 55, the multiple is seven times your annual salary. At age 60, the number is eight times your salary. And finally, at age 67, which is considered full retirement age by Social Security standards, that target is 10 times your annual salary. So all these figures are based on retiring at age 67. Uh again, the full retirement age for Social Security. And if you’re looking to retire before that age, before 67, really those numbers are going to only need to be higher.
Tracy Burke: 19:19
Yeah, and Brian, I would also say, you know, we we know that these are general rules of thumb and we know there’s lots of variables. So uh if if somebody’s listening out there and thinking, wow, I’m not there yet, you know, and I’m behind, just don’t give up. You still have time to recover. Um, these are simply checkpoints, these are not grades. Uh, there are just tons of online calculators that are out there that may be able to help diagnose your financial situation. And and a lot of times, you know, we’re we’re quick to get online and check on, you know, those type of things. Just the words of caution uh on this are not to rely too heavily on what an online calculator spits out. Uh, just like you know, I try my best not to rely on online tools for healthcare needs or for diagnosis, right? For sure. You know, meaning I actually go to see the doctor, we’re not feeling well. I would suggest the same, you know, seeking out professional help when trying to connect those dots and come up with a viable financial plan. So, Brian, I understand maybe we have a few extra seconds here allocated and maybe you have time for a quick bonus statistic. So, what
Tracy Burke: 20:26
is that?
Brian Graff: 20:27
I do have some time, Tracy. All right, this is a quick one and a really interesting one, I think. And BlackRock, the company BlackRock has their own retirement survey. They found that nearly 80% of Americans worry more about running out of money than they do dying.
Tracy Burke: 20:43
Okay. Can you believe that? That’s pretty interesting, right? I’m not, I guess I’m not sure really what to make of that. Uh neither of those, uh, you know, running out of money or dying, neither of those are a very ideal outcome for sure, right?
Brian Graff: 20:56
No, that’s for sure, Tracy. However, one is inevitable, right? However, the other with proper planning doesn’t really have to be. I think we know which one is which. So uh let’s go ahead and then wrap up now with some action items, as we always do. So, Tracy, what do you have for us?
Tracy Burke: 21:10
Yeah, so I I would start by saying, you know, a successful retirement isn’t about finding that hottest investment or pick winning stocks, right? It’s about uh avoiding those big mistakes and controlling what you can control. So the research and the surveys that we took a look at and talked through found consistently uh some of the same habits: keeping costs low, staying diversified, ignoring the short-term market noise and focusing on the long term, uh, controlling your emotions, and then you know, finally having a plan and sticking to it. So, again, if you’re not sure on any of this, reach out to a trusted advisor or reach out to our team for some help.
Brian Graff: 21:57
Terrific advice and things we should always remember. So that is a wrap for this episode, everybody. Thanks so much for tuning in as always. And remember to please reach out to us with any questions or comments. You can get us at podcast at conradsegal.com, and we are here and only too happy to help. And please also remember to share the podcast with friends or family members, coworkers if you’re so inclined. And give us a five-star review and subscribe if you haven’t already. But again, only if you mean it. Uh, thanks so much, everyone, for staying with us on this journey to and through retirement. We’ll see you next time on the Real Talk Retirement Show.
Intro/Closing: 22:34
Thank you for tuning into today’s show. The Real Talk Retirement Show is created and produced by Conrad Siegel, an advisory firm that specializes in helping people prepare for retirement and beyond. If you want to learn more about our work or meet the team, you can visit conradsegal.com. Information on this show is for educational purposes only and should not be considered personalized investment, tax, or legal advice. Before making decisions, you should consult with the appropriate professionals for advice that is specific to your situation.