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Robert Brokamp, the certified financial planner who hosts the Declare Your Financial Independence segment on Motley Fool Money, used his July 4th installment to remind listeners that the return assumption baked into their retirement calculator may be quietly setting them up for disappointment. His warning: “By just about any measure, the US stock market is about as expensive as it’s ever been,” with valuations rivaling the dot-com era.
Brokamp said that he and a recent guest independently arrived at the same numbers when pressure-testing their own plans, using 6% as a pre-retirement return assumption and 5% in retirement, both meaningfully below the long-run historical average for U.S. equities. You can hear the full episode on the Motley Fool podcast page.
Why The “Expensive Market” Warning Matters Now
The backdrop supports the caution. The SPDR S&P 500 ETF Trust (NYSEARCA: SPY), the most common proxy for the U.S. market, is up 20.04% over the past year, 71.72% over five years, and 254.8% over the past decade. Those returns compound off a base that many valuation frameworks (Shiller CAPE, price to sales, market cap to GDP) already flag as historically stretched. Prospectus and holdings disclosures for SPY are filed with the SEC and available via the EDGAR system.
The underlying signals argue for humility about future returns. The CBOE Volatility Index sits at 16.59, well within its typical range, even as University of Michigan consumer sentiment fell to 44.8 in May 2026—an all-time low and far below year-ago levels. Meanwhile, the 10-year Treasury is yielding 4.48%, near the upper end of its range over the past year. Bonds are once again offering retirees a meaningful source of income, changing the calculus behind the traditional 60/40 portfolio.
Inflation still bites. Core PCE, the Fed’s preferred inflation gauge, has climbed to the 90.9th percentile of the past 12 months, while headline CPI sits at the 90th percentile after a 0.5% monthly increase in May 2026. Those readings reinforce the case for using real—not nominal—return assumptions when building any retirement withdrawal plan.
How To Pressure-Test Your Retirement Calculator
Brokamp’s practical checklist for listeners is straightforward:
- Find out what return assumption your calculator uses by default. Many hard-code 7% to 8% nominal.
- Rerun the plan using 6% pre-retirement and 5% in retirement, and see if your success rate holds.
- Stress-test the first decade of retirement specifically. Sequence-of-returns risk is highest then.
- Recheck the inflation input. With CPI running hot, a 2% assumption may be too generous.
If you want to see the impact in your own numbers, plug them into the interactive tool below. Setting the withdrawal rate at 5% instead of 4% (or vice versa) can swing a portfolio’s longevity by decades.
The gap between a 5% and a 7% assumed return has real consequences. On a $1 million portfolio, spending $50,000 a year, adjusted for inflation, that difference decides whether the plan runs for 25 years or comfortably past 40.
The Case For A Second Opinion
Brokamp closed with advice aimed even at committed do-it-yourself investors: get “an objective professional second opinion once every 5 to 10 years or so”, and especially in the run-up to retirement. A fee-only planner who charges hourly or by project can review tax placement, Social Security timing, Roth conversion ladders, and required minimum distribution planning, without selling a product.
With the yield curve compressed to 0.35%, the 4th percentile of the past year, and the Fed holding the funds rate at 3.75% after 75 basis points of cuts, the macro picture is unusually cross-current. That is exactly the environment where a fresh set of eyes on a retirement plan tends to earn its fee. For readers who want to dig deeper into this debate, our coverage of why some planners argue the 4% rule may be dead is a useful companion read.
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