Vanguard and Fidelity Expect Lower Stock Returns - What That Means for a 68-Year-Old With $1.2M and $4,100 in Social Security

Two of the largest investment firms in the country are sending a similar signal about the years ahead: stocks may not deliver what they used to. Vanguard and Fidelity each publish long-term capital-market forecasts that many financial advisors and pension plans use to set expectations for portfolio growth, and both currently point to more modest returns than investors have enjoyed over past decades. That can change how you assess your financial fitness for retirement.

That matters a lot if you're sitting on a retirement nest egg and trying to figure out how long it needs to last. Consider a hypothetical retiree: 68 years old, with $1.2 million in investable assets and $4,100 a month in gross Social Security income. How do more conservative return assumptions change the picture for someone like that?

The answer involves some math, a few important caveats, and a reminder that a forecast is not a guarantee.

What Vanguard and Fidelity are actually forecasting

Vanguard's Capital Markets Model, based on a September 30, 2026, model run and published October 21, 2026, estimates U.S. equities could return an annualized 4.8% to 6.8% over the next 10 years, according to Vanguard's Investment Strategy Group. That's a wide range, and Vanguard notes it reflects nominal returns, meaning the figures don't subtract out inflation, taxes, or investment expenses.

Vanguard also forecasts a 30-year horizon in the same release, and it's important not to blend the 10-year and 30-year numbers into a single prediction, since they're separate outputs of the model covering different stretches of time.

Fidelity, through its FIAM institutional research arm, takes a different lens: a 20-year secular outlook, updated October 13, 2026. Fidelity's team states plainly that it expects asset returns over the next 20 years to be lower than their long-term averages, with stocks still expected to outperform bonds, but by a narrower margin than history has shown, and emerging markets expected to generate the highest returns within the forecast.

Both firms are explicit that "lower" is a comparison to long-run historical averages, not necessarily a cut from either firm's own previous forecast. Vanguard's commentary notes its own return expectations actually improved somewhat during the most recent quarter it covers, as valuations grew more attractive and bond yields rose. In other words, these are not firms predicting a crash.

They're suggesting that the exceptional returns of recent decades may be harder to repeat, largely because starting valuations are historically high and long-term growth potential may be more modest.

Neither forecast is a guarantee. Vanguard describes its model output as "hypothetical in nature" and explicitly states the projections "do not reflect actual investment results." Fidelity's materials carry similar language, calling their assumptions "forward-looking statements" that may not materialize as described.

Building a sample retirement budget

Start with the numbers in this hypothetical: $1.2 million in savings and $4,100 a month, or $49,200 a year, in gross Social Security income. For context, the Social Security Administration's 2026 cost-of-living adjustment (COLA) fact sheet puts the estimated average monthly benefit for all retired workers at $2,071 after the 2.8% COLA took effect, so a $4,100 benefit sits well above the average, closer to the kind of amount a higher earner or a couple might receive.

Social Security's maximum benefit for a worker who delays claiming until age 70 is $5,181 a month in 2026, according to the SSA, while the maximum for someone claiming at full retirement age is a lower $4,152 a month.

Suppose this retiree budgets for $90,000 a year in total spending, a reasonably comfortable but not extravagant lifestyle for many retirees. Subtracting the $49,200 in annual Social Security income leaves a gap of roughly $40,800 a year that the $1.2 million portfolio needs to cover. That's a withdrawal rate of about 3.4% of the starting balance, which sits near the range many financial planners consider sustainable, though individual circumstances, taxes, and market conditions all affect whether any specific rate holds up.

Modeling the portfolio under different return scenarios

Here's where the lower-return forecasts come in. If this portfolio is invested in a mix of stocks and bonds, generates a smooth annualized return in the lower part of Vanguard's or Fidelity's ranges, and the retiree withdraws about $40,800 a year adjusted for inflation, the ending balance after 20 or 30 years would typically be smaller than if returns landed at historical averages instead.

To illustrate: a portfolio earning a steady 5% nominal annual return, withdrawing an inflation-adjusted $40,800 (increasing with assumed inflation), may deplete more slowly than headlines suggest, since withdrawals represent a modest share of the balance. But a lower assumed return compounds over time.

The gap between a 5% and 7% average annual return, sustained for two to three decades, can mean a difference of hundreds of thousands of dollars in an ending balance, even before accounting for taxes, fees, or required minimum distributions from tax-deferred accounts.

It's also important to model a poor-early-returns scenario, not just a smooth average. Sequence-of-returns risk means that a portfolio that loses value in the first few years of retirement, even if it later recovers to the same average annual return, can end up depleted faster than one that grows steadily from the start, because withdrawals continue regardless of market performance.

A retiree who experiences a 15% decline in year one or two of retirement, followed by an eventual recovery to the forecasted long-term average, may see a meaningfully different outcome than someone whose returns arrive smoothly and in order, even if the long-term average return is identical in both cases.

A lower ending balance isn't the same as running out of money

These forecasts describe expected returns, not certainties, and a lower projected ending balance after 20 or 30 years is a different outcome than actually exhausting savings. A retiree whose portfolio grows more slowly than historical averages may still have sufficient assets to last through retirement, particularly if spending, Social Security income, and withdrawal timing are managed together.

Forecasts like Vanguard's and Fidelity's are designed to inform long-term planning assumptions, not to predict any single year's performance or to serve as a guarantee of what any individual portfolio will do.

Assumptions matter enormously here. The scenarios above assume a diversified mix of stocks and bonds, don't assume any particular allocation percentage, and are stated in nominal terms unless otherwise noted, meaning inflation would reduce real purchasing power further. They also don't account for investment fees, which compound over time, or for taxes on withdrawals from tax-deferred accounts like a 401(k) or traditional IRA, which can take a meaningful bite out of gross withdrawals. A Roth IRA, by contrast, generally allows tax-free withdrawals in retirement if certain conditions are met.

Practical adjustments retirees can consider

Retirees facing a more conservative return environment have several levers available, separate from any specific investment recommendation. These can include adjusting annual spending to track more closely with portfolio performance in a given year, revisiting asset allocation with a financial advisor as circumstances change, and considering how the timing of Social Security claiming affects the overall income mix.

Delaying Social Security past full retirement age, for those who are able, generally increases the monthly benefit through delayed retirement credits, which SSA describes as an increase of about 8% per year for each year delayed between full retirement age and age 70.

Working with a fee-only financial advisor or using SSA's own benefit calculators can help translate these general forecasts into a plan tailored to an individual's full financial picture, including pensions, other savings, health care costs, and tax situation. None of these forecasts should be treated as a reason to overhaul a retirement plan on their own; they're inputs into a broader conversation.

Bottom line

Lower return forecasts from major firms like Vanguard and Fidelity don't spell doom for retirees, but they're a useful nudge to stress-test retirement assumptions, especially around spending rates, asset allocation, and how a poor start to retirement could affect a portfolio differently than smooth average growth would suggest. The math changes meaningfully when Social Security income, even a healthy $4,100 a month, only covers part of annual spending.

For retirees and near-retirees, the SSA's online benefit estimator and a my Social Security account can help pin down actual projected benefits at different claiming ages, which is a critical input into any of these scenarios.

Pairing that information with a financial advisor's analysis of portfolio withdrawal strategies, tailored to real spending needs and risk tolerance, can help retirees avoid common money mistakes and produce a far more useful plan than any single capital-market forecast on its own.

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