I've been planning for early retirement for years. Like most people, I plugged my numbers into calculators that assumed around 7-8% returns, saw a comfortable success rate, and felt good about my plan.
Then I started digging into what the professionals actually assume.
BlackRock expects 6.5% for US stocks. Vanguard says 4.5%. GMO—which correctly predicted the 2000s lost decade—says 0.5%.
Wait, what?
I decided to run my exact retirement plan through each of these assumption sets. Same savings, same spending, same timeline. Just different return assumptions.
The results were... illuminating.
Here's what I was testing:
Pretty standard aggressive FIRE plan. Twelve more years of saving, then 40 years of retirement.
I ran this through a Monte Carlo simulator using five different assumption sets:
| Assumption Set | Success Rate | Median End Balance |
|---|---|---|
| Historical | 91% | $3.2 million |
| JPMorgan | 76% | $1.4 million |
| BlackRock | 72% | $1.1 million |
| Vanguard | 58% | $420,000 |
| GMO | 34% | Ran out at 82 |
That's a 57 percentage point spread between the most optimistic and most pessimistic assumptions.
Under historical assumptions, I'm basically set. 91% success rate, likely dying with millions.
Under GMO's assumptions, I have a coin flip's chance of running out of money by my early 80s.
Same exact plan.
If markets return what they've returned historically (10%+ for stocks), my plan is rock solid. This is what most online calculators would show me.
But it assumes valuations don't matter (they do), the future will look like the past (uncertain), and the US will continue dominating global markets (possible but not guaranteed).
These are the assumptions that pension funds and endowments actually use. A 72-76% success rate isn't bad, but it's not comfortable either.
It means roughly 1-in-4 scenarios lead to trouble.
Vanguard is known for conservative projections. At 58% success, I'm barely better than a coin flip.
GMO has been bearish on US stocks for years. At 34% success, my plan is in serious trouble under their assumptions.
The 57-point spread tells me something important: my retirement success depends heavily on which future materializes.
If you showed me only the historical result (91%), I'd feel great. But that's cherry-picking the most optimistic assumption.
Nobody knows if BlackRock or GMO will be closer to reality. We won't know for 20 years.
What I can do is understand my sensitivity to assumptions and plan accordingly.
Looking at these numbers, the best thing I can do isn't necessarily saving more. It's building in flexibility:
This flexibility doesn't show up in the numbers, but it effectively converts some "failure" scenarios into "adjustment" scenarios.
Instead of hard-targeting retirement at 50, I'm thinking 50-52 depending on market conditions.
This flexibility alone moves my Vanguard success rate from 58% to 71%.
I'm increasing my target emergency fund from 1 year to 2 years of expenses. This protects against sequence of returns risk.
This guardrails approach dramatically improves success rates across all assumptions.
If your retirement plan only shows you one number based on one assumption, you're missing the most important insight: how sensitive is your plan to being wrong?
A 91% success rate using historical assumptions might be 58% using Vanguard's assumptions and 34% using GMO's.
That spread matters more than any single number.
I'd rather have an 80% success rate that's stable across assumptions than a 95% rate that's fragile.
The professionals—pension funds, endowments, financial advisors—don't use historical averages. They use forward-looking estimates. And they test multiple scenarios.
You should too.
Run your retirement plan through the same assumptions BlackRock, JPMorgan, Vanguard, and GMO use. See your success rate under each scenario. Understand your sensitivity.
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