TIAA-CREF would be my recommendation. Their programs come in many flavors, not all of which offer the same combination of retirement class funds and annuities. As a general matter, they have a nice series of target-date funds that are built purely around index funds. And their Real Estate account is, literally, in a class by itself. It invests directly in real estate rather than just in real estate securities. It utterly crashed in the 2008 market crisis; that was one disastrous 24 months period sandwiched by 18 years of remarkably steady returns.
David

When GMO refers to 7-year forecasts, they are definitely not suggesting that this change will happen for seven years in a row. On the contrary, they are very clear that they never make short-term forecasts.
So what they are saying is that seven years from now, after accounting for 2.2% inflation, the value of each of these asset classes will be as if it had risen/fallen by this percent each of the seven years. They don't claim to know if it will do this in a straight line or on a roller-coaster.

For those unfamiliar with FundAlarm and for folks looking for a nostalgic rush, here's a snapshot of the FA discussion board from January 2011 and April 2005.
Roy Weitz launched FundAlarm 18 years ago as an antidote to the mindless hype that fund companies were getting away with. He combined a tart monthly commentary with a list of funds to avoid, then added a discussion board. About six years ago he felt himself running out of steam and asked if I'd write a new feature on small and new funds; after a year, Roy granted himself a sabbatical and I took up the monthly commentary. About four years ago he admitted that he'd written himself out; he felt he was stretching for content and made my role permanent.
About three and a half years ago, Roy's parents encountered simultaneous health crises and he let the community know that he was retiring FundAlarm to care for family. At Roy's prodding a number of folks encouraged me to launch "a site in the tradition of FundAlarm." Lacking any technical skills, I paid Brad Isbell, an IT colleague at Augustana, to design the site and prevailed upon my friend Cheryl Welsch (a/k/a Chip) to maintain it. We did a "soft launch" on April 1 2011 and had a sort of grand opening on May 1 2011. Our early look was ... uhhh, rudimentary. Anna Zolotusky, web designer whose mom was (is?) a fan, volunteered to bring us into the 21st century (and did).
We run two major software packages side-by-side: WordPress underlies the entire site and Vanilla underlies the discussion board. Chip frets rather more about WordPress, Accipiter - who taught himself programming for the purpose - frets rather more about Vanilla. Accipiter also wrote the Navigator program, which allows you to find a wealth of targeted information about any fund. As our discussion board software grew in complexity (Accipiter has written a bunch of custom programs for it), OJ generously wrote a really first-rate users guide.
Charles, like me, started as a member of the discussion community with a special knack. I'm not sure what my knack was. Charles's is making data sing. After reading one particularly fine post, I asked Charles if we might include it in the monthly commentary and had the pleasure, thereafter, to have him contribute pieces with a sophisticated statistical bent on a regular basis. As he thought about what the site needed, he also designed both our fund screener and the metrics behind it which led to the Great Owl designation.
Ed Studzinski, whose career included stints in the Navy JAG office and banking as well as co-managing OAKBX, had been sharing behind the scenes commentary on the industry and its players by phone. Eventually I persuaded him to address a larger audience about the dynamics of the industry and the way they affect our fates.
All on less than $700 a month.
Hope that helps,
David

I was thinking back a few years when "tactical" seemed to be the buzz word in investor circles. I actually didn't know there was a difference in meaning between tactical and strategic, or tactic and strategy.
Thanks for the references.

I will tell you why average investor has lagged. It is because average investor does not invest lumpsum and hold on for dear life for 20 years. This is what happens to average investor.
Average investor is told to DCA. So he starts DCAing at Y-20. He had $100,000 but he does not invest $100,000 at Y-20. He invests $5K, then another $5K at Y-19. Market is going up. He DCA'ing is effing him up. At Y-15 he realizes is $25 investment is only worth $40K. Everyone is celebrating 5-year returns. M* is rolling out red carpet for fund companies.
Average Jo now takes remaining $75K and invests it Y-15. Y-14 his $115K investment is now worth $120K. He is still up, and he is complacent because so is everyone else. Market starts tanking. Y - 12 his investment is worth $120K. 5 Years numbers are still positive from funds. He thinks, oh yeah market will come back. Y - 11 He is at $55K. 5 year numbers suck!. Things are not okay any more. He sells.
$100K is now worth $55K. Y - 10. Market returned 50% in the past 2 years. Time to get back in again. Rinse. Repeat.
Moral Of the Story: Stop watching CNBC, Stop reading M*. Come to MFO. Learn.

Also, arn't there student loan forgiveness program out there for those that choose education as a profession?

Without debating whether it is the "education" field, not generally for people who become professors. Though the restructuring of federal student loans now essentially means forgiveness after 20 years.
I'm guessing, but at 27 her chances are her student debt may be minimally limited to undergrad. Let me second the 9% is amazing comment, though. Especially given how tight money can be at universities and colleges. Great deal.

Back in my youth, I was in a similar position and ended up with 403b's at both TIAA-CREF and Valic. Looking back years later, IMO you have only one choice and that is TIAA-CREF.

Keep in mind, that's real-return, so they are assuming something like 2.5% inflation. Which means something around -1.5 to -2% a year going forward.

Still need substantially sized cajones to make the call ANY mainstream asset class is going to on average yield negative returns for 7 years. I don't think even Hussman is saying that, and he is already in the dog house for the rest of this century!
My point, we need to applaud the true visionaries and/or need to verify if Grantham is also a BS artist. 7 years. I hope to be alive. I hope to remember to check.

thanks mrdarcey. I'll have to take a look at those. I believe there have been some articles this year, possibly one by Larry Swedroe, saying that dividends were getting quite popular and therefore expensive.....so that the P/E ratios on some of the dividend exchange traded funds was too high. Swedroe in particular was advising total return investing and not dividend investing for that as well as other reasons. I'd have to look for those articles.

I've seen Swedroe make the point that it shouldn't matter towards cap gains if you take dividends out or not and sort of poo poo DRIPing. Basically telling investors to create their own dividends by selling a %age of gains. But the thought is supposed to be that dividends and low payout ratios (and to some extent buybacks) impose some restraint on corporate misbehavior, and that only high quality firms can afford to continually restrain themselves by returning profits. You've probably seen the same things I have there. Some valuations seem stretched, but these are maybe companies people are willing to pay up a little for.
Forgot to add M*'s wide-moat index, MOAT.

Negative 4.4 returns for small caps for 7 years in a row. Takes some cajones to make that call. Setting a reminder for 2021.

Keep in mind, that's real-return, so they are assuming something like 2.5% inflation. Which means something around -1.5 to -2% a year going forward.

Domestic Energy/Heath-Bio
https://www.google.com/finance?q=NYSEARCA:IEO&ei=xj3sU6CECYbPrQGu_4HwCA
https://www.google.com/finance?q=MUTF:FRAK&ei=xj3sU6CECYbPrQGu_4HwCA
http://news.morningstar.com/fund-category-returns/energy-limited-partnership/$FOCA$LP.aspx
http://news.morningstar.com/fund-category-returns/equity-energy/$FOCA$EE.aspx
http://news.morningstar.com/fund-category-returns/health/$FOCA$SH.aspx
http://etfdb.com/index/health-care-select-sector-index/
An Economist's Perspective From Mesirow Financial's Diane C Swonk
"I debate with my colleagues on economics,
politics and psychology about the nature
of the changes that we are seeing: if they
are “cyclical,” then the effects of the
changes will be short-lived, and over within
a few months or quarters; or, if they
“structural,”then the effects of what we are
seeing will take much longer to play out;
it will take years to see the full impact and
could affect the lives of our children as well
as ourselves. This report takes a closer look at some of
the structural changes that we see emerging,
and how they are likely to affect the pace
and composition of growth going forward.
Technically we have shifted from a recovery
into an expansion. Waiting for a more
pronounced recovery, however, has been a
bit like waiting for Godot. Much of that
is because of the structural shifts we are
seeing in everything from a slowdown
across emerging markets, most notably in
China, to the ongoing challenges that the
Eurozone faces, and what those shifts mean
for monetary policy."
CHICAGO, August 13, 2014 – In the August issue of Themes on the Economy®, Mesirow Financial' s Chief Economist Diane Swonk muses on economic challenges and burdens that baby boomers are leaving for the millennial generation. "This will no doubt trigger some backlash, particularly among younger workers who will have to pay more into the system to keep the promises made, but they will not get much (if anything) in government-sponsored retirement benefits for themselves."
And, don't look to make it up in stock market, technology or housing bubbles; the Federal Reserve is keeping a much closer eye on the banks it regulates. Chair Janet "Yellen has talked about higher capital requirements and more conservative underwriting standards as ways that the Fed could deflate emerging bubbles. She has also praised the use of regulations targeted at tempering the rise in home prices..." The Fed plans to exit its QE3 program gradually, but the "fear is that the economy is more sensitive to rate hikes now than it was in the past. If the Fed acts too aggressively, it risks leveling the whole forest."
The picture looks different in other parts of the world, too. China will still represent opportunity but competition as well, and not just on the economic front, as it increases military spending. Swonk also cautions that, "stability in the Eurozone is illusory," with "the ongoing risk of deflation" and the effects on sovereign debt.
http://www.mesirowfinancial.com/economics/swonk/themes/themes_0814.pdf
Everything is Good!
Tonight's Headline
Shares, bonds rally as investors bank on ENDLESS stimulus.
Reuters By By Wayne Cole
2 hours ago
http://news.yahoo.com/asia-shares-investors-bank-more-stimulus-013020693--finance.html

Negative 4.4 returns for small caps for 7 years in a row. Takes some cajones to make that call. Setting a reminder for 2021.

Yeah, that's quite a forecast. It would be much easier to gloss over that forecast if it was made by Harry Dent, Dr. Doom (Marc Faber) or Peter Schiff.
But Jeremy Grantham and GMO should not be glossed over so easily.
I can only imagine a portfolio constructed on the basis of that forecast.
Let's see now.......how should that portfolio be constructed? Let's keep it very simple.
35% Emerging market stocks
30% US High quality stocks
15% Emerging market bonds
10% Developed small international stocks
10% Developed large international stocks
In you're in that portfolio, better hope the US dollar does not strengthen!

@Ted I'd be interested to know how Sam and Art's prognostications have played out over the years. Do you know of any reference material?

Negative 4.4 returns for small caps for 7 years in a row. Takes some cajones to make that call. Setting a reminder for 2021.

....but I thought we were talking about what we as parents or grandparents can do for Charlotte by contributing $1 each day for 18 years. If I did the math right, if we use the Fed's target rate of 2% inflation, then her $4.2 million at age 65 is worth a little less than $1.2 million in today's terms. Its still not an insignificant sum, but inflation can't simply be dismissed because Charlotte will add to her investments.

LLJB, appreciate if you will go over the math that you did for your calculation......the step by step calculation you performed, with inputs and output. Thanks!

I don't know that much about the other funds but looking at the last 15 years it is only very recently that Sequoia was a large cap growth fund . For most of the period it was considered large cap value and somewhat recently large cap core

What's interesting is that these Intrepid guys are clearly willing to stand by their principles in a big way and it has worked historically. ICMAX and IWM were close to being equal from the fund's inception until mid 2008. ICMAX lost far less than IWM and pretty much everybody else during the crisis and it took years for IWM and any of my small cap favorites to catch up. Eventually they did, but if Intrepid is right about small-cap valuations then they will again significantly outperform during a sizeable downturn. If you believe there's still upside for a while into the future, then they will be way behind when a correction eventually comes and it may be more difficult to regain a long term edge. I normally like these kinds of guys- principled, focused, willing to bet big on what they believe in. Unfortunately, I'm not sure I could hang in there when they're in the 99th percentile for the last 5 years.

This may be a bit misleading because this list is only US focused large-cap growth funds and it doesn't include any sector specific funds. So I looked at large-cap growth funds through today without any restrictions and here's what I found. There were 467 distinct funds in existence for the last 15 years and 16 of them were better than Vanguard's Capital Opportunity fund which tops the linked list. Most of them were emerging markets or sector specific, but apparently Fidelity's Canada fund did marginally better as well. The last fund on the linked list was Fidelity Contrafund, which was ranked 13th on the linked list but came in at number 90 on my screen, or top 20%. Apparently 296 of the funds (or 63%) beat the S&P 500. I'd be a little suspicious of the claim that large cap growth funds on average only earned 4.45% over the last 15 years too. Essentially that's no return on an annual basis, but of the 467 funds on the screen I ran only 6 had negative annual returns for the last 15 years. Maybe the statement includes a bunch of funds that existed, lost money and then liquidated so they don't show up in my screen.
I wouldn't debate whether core funds or value funds did better than growth funds, but the idea that the S&P, core and value funds all grew this much and growth did nothing seems odd.

http://www.intrepidcapitalfunds.com/media/Small_Cap_Fund_2Q14_commentary.pdf
I have a small position in this fund for quite a while. I know some here would point to its
high cash position and lower performance in recent years, but the fund has done well over
its lifetime.

It achieves a most amazing result when the author simply dismisses inflation because Charlotte probably will be able to add to her investments through her adult life. That's great for Charlotte, it means she's earning more than it costs her to live, but I thought we were talking about what we as parents or grandparents can do for Charlotte by contributing $1 each day for 18 years. If I did the math right, if we use the Fed's target rate of 2% inflation, then her $4.2 million at age 65 is worth a little less than $1.2 million in today's terms. Its still not an insignificant sum, but inflation can't simply be dismissed because Charlotte will add to her investments.
My older kids were lucky enough to inherit a bit of money from their great grandmother when they were young and I invested $4000 in PRHSX for my last one on the day she was born. I don't really want my kids to think about those gifts as retirement money, but for whatever they decide I'd hope they've at least had a decent head start.