The world changed in ways that were not consistent with conventional retirement wisdom. Or to put it another way, people looked at the piles of money sitting in pensions and figured out a way to get their hands on it because that was their full time job. For what it's worth, there are people who spend all day everyday thinking about your retirement savings becoming their money because skating to where the conventional retirement wisdom for retirement is going is still a job people have.
For what it's worth, a lot of people who had retirement savings saw that money shrink by 40-60% in 2008-2009. There's no coming back from that even with ten years of 7% net growth, you're still behind inflation without drawing any of the capital and profits...and you're not going to get ten years of 7% net growth without extraordinary good luck.
Typically, I would agree, however in the cited time period I would not. From the middle of 2009 to now the DJI is up 180%. Significantly more than the 7%.
From Peak 2007, that money is up 90% since 2007.
By simply holding and not selling broad index funds, you would have been fine.
+ Alitra, Honeywell for BOA and Chevron: Remember Honeywell?
+ AIG for Kraft Foods: AIG was worth close to $0 and Kraft was worth something and so the DJI went up because averaging in something is better than averaging in nothing.
+ Citigroup, GM for Cisco and Travelers: GM was at about $10 and getting bailed out by the government. Consumer spending was down for Citi. The internet was exploding and Travelers had cash reserves to invest in the down market.
+ Kraft for United Health Group. More money in fixing the problems that come from eating Cheez Whiz than selling it.
+ Alcoa, BOA, HP for Goldman Sachs, Nike, Visa. Remember HP?
+ ATT for Apple: Replacing the ~$50 ATT with the ~$500 Apple made the average go up. If you can swap out shares in your portfolio similarly, my advice is to do so.
The conventional advice is to play the market because the DJI is up. It doesn't explain how the DJI works and that you can't replicate its performance. And if you are retired, you have to live off the money and the size of your pile is shrinking not growing. The conventional advice comes from an industry that has no problem using your life savings for its own purposes.
https://finance.google.com/finance?chdnp=1&chdd=1&chds=1&chd...
You will notice a negligible difference, all of my points stand.
If a person had bought into it in 2007, they would have done reasonably well...a little worse than 7% per year compounded. All that a person needed was an oracle to pick a winner. On the other hand, the ten year from 1999 to 2009 would not have looked so good and it's not providing DJI like increases in value because the DJI is Public Relations not finance (that's why it doesn't indicate when to make money as a bear).
Keep in mind that in terms of retirement, pensions looked good and in 1992 when the Vangard fund became available the artist was already sixty-two years old. There's no guarantee that today's Vanguard Fund will look as attractive in twenty, thirty or forty years when the people following conventional retirement advice have to cash in their chips. The fund performed better than average.
Finally, people lost their jobs in the downturn and often had to dip into retirement savings to keep themselves afloat. Even with a time machine, it isn't possible for many people to have timed the market perfectly by investing heavily at the 2009 trough. That's the smoke and hand waving that the conventional financial advice uses to dismiss actual individual circumstances...well that and the idea that poverty reflects a lack of virtue.