Fidelity, Vanguard issue the same sobering 10-year outlook — and US retirees stand to suffer most. Protect your nest egg Vishesh Raisinghani Sun, November 8, 2026 at 7:15 AM EST 6 min read GC=F -0.94% Photo by Pressmaster / Shutterstock Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below.
Retirement planning is often based on several assumptions.
There's simply no way to predict how long you will live, how much inflation you will experience during your retirement and what the stock and bond markets will do over that same period.
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So you're left to plan for roughly 30 years based on some well-informed guesses.
One of those variables is market returns. Most retirees take a look at historical returns from the stock market and expect a similar return in their retirement years. Since the S&P 500 was launched in 1957, it has delivered an average annual return of 10%, according to Fidelity (1). An entire generation has probably used that 10% assumption to design all their financial plans.
Still, past performance isn't an indicator of future returns. In fact, Fidelity and Vanguard have both issued future guidance for the stock market that looks a lot less attractive than the 10% average.
Here's why U.S. retirees should pay close attention to these sobering forecasts.
Major investment firms use different methodologies to forecast stock market returns over the long term, but in general they focus on similar factors such as valuations, interest rates, inflation and earnings growth projections.
In 2026, two of the biggest firms have long-term forecasts significantly below the 10% historical average. Vanguard's 10-year outlook (2) published late October suggests U.S. stocks will deliver an average annual return between 4.8%–6.8% over the next decade. And Fidelity's forecast holds for much longer. The firm issued a 20-year forecast (3) with expectations set at 5.8% for US stocks.
Reasons for the modest forecasts include higher starting valuations, lower growth potential and frothy market conditions.
To be fair, none of the Wall Street firms have crystal balls. An educated guess based on rigorous research by an army of analysts is still just a best guess. Nevertheless, these cautious sentiments from Wall Street heavyweights should temper some of your own expectations for market returns, especially if you're in early retirement.
To illustrate this point, imagine having $500,000 compounding at 10% for 10 years. In this environment, your savings grow to about $1.3 million. But that same amount hits around $814,000 at just 5% — nearly a $500,000 difference with the same investment.
Preparing for stock market underperformance is probably the savvy approach. That way, you're not caught off guard and forced into uncomfortable lifestyle adjustments if the market delivers single-digit returns in the decade ahead.
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Although you can't predict market performance, you can certainly prepare for it. Retirees can brace for a period of market weakness by focusing on their withdrawals, cash buffer and reliable sources of income.
Arguably the most important of these is the withdrawal rate. The standard 4% rule is designed for long-term horizons.
But a better approach could be to follow a flexible withdrawal range rather than a fixed rate. For instance, you could set a range of 2% to 5% and aim for the lower or upper end of that spectrum depending on the previous year's performance. That way, you're not draining your funds at a steady pace when the market declines.
If you're working with a sizable nest egg (worth at least $250,000), it's worth considering professional assistance.
An experienced financial advisor can help you determine the right withdrawal rate every year. If you have a portfolio of $250,000 or more, platforms like WiserAdvisor can connect you with vetted professionals who specialize in this kind of planning.
Simply answer a few questions about your savings, retirement timeline and overall investment portfolio.
From there, WiserAdvisor reviews its network to match you — for free — with up to three vetted, reputable advisors aligned with your specific needs.
You can then schedule no-obligation consultations with your matches to determine who is the best fit for your long-term goals.
WiserAdvisor is a matching service and does not provide financial advice directly. All matched advisors are third parties and specific financial results are not guaranteed.
You could also create a cash buffer in a high-yield savings account that matches your budget for a six-month or one-year period. This allows you to avoid selling stocks during a brutal market sell-off.
A high-yield account like a Wealthfront Cash Account can be a great place to grow your uninvested cash, offering both competitive interest rates and easy access to your money when you need it.
A Wealthfront Cash Account currently offers a base rate APY of 3.55% through program banks. With a new client boost and direct deposit incentive, referred clients can earn up to a 4.55% APY.
That's nearly 10 times the national deposit savings rate, according to the FDIC's October report (4).
With no minimum balances or account fees, as well as 24/7 withdrawals and free domestic wire transfers, your funds remain accessible at all times. Plus, you get access to up to $8 million FDIC Insurance eligibility through program banks.
Finally, you could lean heavily into reliable sources of income such as pensions or Social Security. By relying less on the market and more on these robust sources of retirement cash flow, you can minimize your exposure.
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Fidelity (1); Vanguard (2); Morningstar (3); Federal Deposit Insurance Corporation (4)
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
