Fidelity, Vanguard issue the same sobering 10-year outlook — and US retirees stand to suffer most. Protect your nest egg

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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.