Historical S&P 500 Returns
The S&P 500 has returned approximately 10.5% annually since 1926 (nominal), or about 7–8% after inflation. This is why most retirement calculators use 7% as a default return assumption.
| Decade | Avg Annual Return | Best Year | Worst Year | Context |
|---|---|---|---|---|
| 1990s (1990–1999) | +18.2% | +37.6% | -3.1% | Bull market decade; dot-com bubble forming |
| 2000s (2000–2009) | -0.9% | +28.7% | -37% | Lost decade: dot-com crash + 2008 financial crisis |
| 2010s (2010–2019) | +13.6% | +32.4% | -4.4% | Strong bull market; longest in history |
| 2020s (2020–2024) | +15.7% | +31.5% | -18.1% | COVID crash and recovery; inflation surge in 2022 |
Source: S&P 500 total return (including dividends). Past performance does not guarantee future results.
Key Takeaways for Retirement Planning
- The market has positive returns in roughly 75% of years — bad years are normal and temporary
- Even the "lost decade" of the 2000s recovered fully within a few years for long-term investors
- A 7% real return assumption is reasonable for long-term planning; use 5–6% for conservative projections
- Sequence of returns matters most in the first 5–10 years of retirement — a crash early is more damaging than one later
Model different return scenarios in your retirement plan