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The work of saving for retirement will take a little more out of you in the years ahead.

Returns from stocks and bonds are widely expected to shrink, and that calls for a review of your financial thinking. If you're already using conservative return estimates, then you're fine. If you're projecting high single-digit returns or more, then you need to recalibrate. Saving more or saving longer may be required.

We've seen two ripping stock market corrections in the past decade and a half, and yet returns have been just excellent for buy-and-hold investors who are steadily building their retirement savings. The 20- and 30-year average annual returns for the Canadian stock market to April 30 were both a hair's width below 9 per cent, including dividends. Bonds have been just ridiculous – average 20-year gains of almost 7 per cent.

It's human nature to try to understand what the future holds by looking backward, but it's a risky way to plan your finances right now. Throughout the financial industry, there's a growing recognition that investment returns in the years ahead won't live up to what we've seen lately. Diminished returns were mentioned by a few of the people I spoke to while moderating a panel at a meeting of chartered financial analysts (CFAs) last month. The same theme can be seen in new guidelines for financial planners on the return assumptions they should use.

The guidelines were issued in April by the Institut Québécois de Planification Financière and the Financial Planning Standards Council, based on a survey of the latest and best thinking on the markets (read more about the guidelines online). For long-term planning, they suggest using 6.3 per cent for Canadian stocks and 3.9 per cent for Canadian bonds. Those are before-fee numbers.

In 2012, the guidelines pegged stocks at 7 per cent and bonds at 4.5 per cent. Why the creeping pessimism about returns? Partly, it's based on the idea that we are in a slow-growth world that won't drive the big gains in the corporate earnings that support rising share prices. Here in Canada, we face the additional drag on growth posed by an aging population.

There's also a sense that the great returns in stocks and bonds have been fuelled by central banks cutting interest rates to support the economy. If rates edge closer to normal levels, then stocks will lose a huge source of support and bonds will be hit hard. Remember, bond prices move in the opposite direction of interest rates.

The bond return guidelines published by the IQPF and FPSC are meant to be used in long-term planning; in the near to medium term, bond returns could easily be worse than 3.9 per cent. We might even see investors with negative total returns on bonds, which means bonds fall enough in price to more than offset the interest they pay out.

So what returns should you expect from a balanced portfolio? The IQPF-FPSC guidelines suggest 3.3 per cent after fees for a mix of 5 per cent cash, 45 per cent bonds and 50 per cent Canadian stocks. Add some global stocks to the mix and you might add another half a percentage point or so. Let's summarize by saying that 3.5 per cent is a conservative estimate for future portfolio returns.

Modest gains like this mean it's time for us to get acquainted with an important rule of saving: The lower your return, the more your end results are influenced by the money you contribute as opposed to investment gains.

Imagine you put $500 per month into a retirement savings portfolio that earns 7 per cent annually for 30 years. You end up with $588,032 at the end of that period, or $180,000 of your own money plus $408,032 in growth. Growth is a huge factor here, but it isn't until Year 19 of this savings program that it becomes a bigger factor than the amount you contributed.

Now, let's see what happens at 3.5 per cent. Your total at the end falls to $315,577, or the same $180,000 in contributions plus $135,577 in growth. At this lower return, your own contributions are a much bigger factor than your investment gains right through the entire 30 years.

We used to be able to build our retirement savings with the stock and bond markets doing most of the heavy lifting. In the years just ahead, more of the work will be done with our own savings.