I need some verification: here is the problem, I have a friend who started to work for LA county in jul 1982 when the $spx was at 107 and he retired in april of 2000 when the index was at 1452. the gain on initial capital invested from jul 82 to apr 2000 was 1257%. the average annual roi was 69% per year. (12.57/18). Now correct me if I am off here. average annual gain of 69% per year or if you were perfectly compounding your average annual gains the gain on initial investment from 1982 to 2000 would be 1.69^18=12646, or 12646x$2000=25292437 dollars, providing you reinvest your gains every year and you bail out in apr 2000, correct? Based on this, is it possible for pension funds to just invest in the broad market indexes, eg sp500 over the long haul and compound their gains every year, and then over a 20 year span, to have enough increase on capital and recommitted capital from income so that a pensioneer can retire with 90% of his current salary, and have enough vested to last 30 years into old age? My guess is it sounds easy, but extremely hard to implement, due to human nature's frailities, right?