What Is a Reasonable Rate of Return After Retirement?

Summary: After retiring, a crucial decision is deciding how much of your retirement money to keep in stocks and bonds.

Reasonable Rate of Return In Retirement Planning

Overview of the Importance of a Reasonable Rate of Return

After retiring, a crucial decision is deciding how much of your retirement money to keep in stocks and bonds. Over the long term, stocks provide a better return but more volatility. If you were the unlucky person retiring in February 1999, your 10-year future stock market return was -3% a year.[i]  

Factors to Consider When Determining a Reasonable Rate of Return

I ran a hypothetical of a well-known stock mutual fund using that date, a one-million-dollar investment, and 5% yearly withdrawals. At the end of those ten years, the account was worth a little over $600,000.

That same fund and a $1 million investment and 5% annual withdrawals during the best ten-year stock market returns (Aug 1990–Aug 2000) ended with over $3.5 million.

5% of $3.5 million generates $175,000 a year in future retirement income, while 5% of $600,000 gets you only $30,000 per year.

Another well-known but more conservative fund with about 30% in bonds and the rest in dividend paying stocks with those same scenarios had around $860,000 after the worst ten-year period and $2,200,000 after the best.

When the Seasons of Life Change, Your Financial Strategy Should Change, Too.

Tim is an independent financial advisor who knows how to adjust your financial strategy to adapt to life's changes. Whether you're an individual, couple, small business, or family trust, he'll help you stay on track despite the shifts in the landscape.

Strategies for Maximizing Returns

The math gets simple: your portfolio will fall in value if you withdraw a higher percentage than you are earning, but on the other hand, if you are lucky and make more than you are taking out, the portfolio will rise and help cushion the impact of rising prices by generating more income.

Stocks provide the best opportunity to generate a higher return than the 5% you withdraw each year. However, because they are susceptible to significant drops like in 2000 and 2008, too many of them can put your retirement income goals at risk.

Types of Investments That Can Provide a Reasonable Rate of Return

Having a percentage of retirement money in bonds will reduce the large drops. However, it will also reduce the gains someone with a larger stock share may earn.

In February of 1999, the first scenario, the stock market, much like today, was highly-priced. The same goes for 2007 before the financial crisis. In the 1999 Dotcom bubble, the NASDAQ dropped 78%, while in the 2008 financial crisis, the S&P 500 fell 46%. Big drops like these cause much of the subpar future yearly returns.

[i] Anspach, Dana. “ The Best and Worst Rolling Index Returns 1973-2016.” January 05, 2022. https://www.thebalance.com/rolling-index-returns-4061795

These are the opinions of Financial Advisor Tim Hayes and not necessarily those of Cambridge Investment Research. They are for informational purposes only and should not be construed or acted upon as individualized investment advice. Content provided via links to third-party sites should not be considered an endorsement of content that we cannot verify completeness or accuracy of.

Please share

Book a Free Virtual or In-Person Consultation with Tim!

The Advantage of an Advisor: Real Stories from Real People

Phyllis Gleason


“I was fortunate to get a recommendation for Tim Hayes from a colleague many years ago, and I have benefitted greatly from our partnership. At our first meeting, I immediately felt that I was in good hands. Tim is a wonderful listener, and he asked great questions that allowed me to focus my long-term financial goals. He has always been very responsive to any questions I have had and keeps me informed about the impact the vagaries of the investment world have on my portfolio while, at the same time, giving me advise on our next steps. I would highly recommend Tim to anyone needing investment services. Both his knowledge and his thoroughness are refreshingly impressive.”

“Tim Hayes has been my financial advisor for a number of years. He has always been patient with my questions and explains everything in understandable terms. It is a pleasure to have him as my Financial Advisor, and I look forward to many productive years ahead.”

Penny Demers


Deidre McDonald


“I have been working with Tim Hayes for several years. Tim has excellent communication skills, knowledge, integrity and experience. He has the client’s best interest at heart and shares pertinent information in a timely manner. To wit, during the recent market decline Tim implemented alterations and amendments that positively effected my account. Tim’s approachability and willingness to touch base through written and oral narratives contribute to my continuation of his service.”

Reviews on this site may or may not be by clients of the firm. No compensation is being provided for sharing of opinions and experiences on this site. The reviewer’s comments may not be representative of any other person’s experience and is no guarantee of future performance or success.

Scroll to Top