Calculating S&P 500 growth for retirement

[David Yee]

Hello! At the moment my retirement investments are primarily focused on the S&P 500. I've used a number of different retirement calculators but am having a bit of difficulty navigating them; especially with respect to accounting for inflation. What average percentage of growth should I expect from the S&P 500 year over year? I've seen percentages range from 7% to 11%. How should I account for inflation? 

Thank you!

[Steve Vaughan]

Quote from @David Yee:

Hello! At the moment my retirement investments are primarily focused on the S&P 500. I've used a number of different retirement calculators but am having a bit of difficulty navigating them; especially with respect to accounting for inflation. What average percentage of growth should I expect from the S&P 500 year over year? I've seen percentages range from 7% to 11%. How should I account for inflation? 

 To me, the historical and anticipated future returns of the S&P is literally inflation plus 4% over time. 

Inflation is supposed to be baked in, hence the 4% rule of safe/perpetual withdrawals. As costs of goods rise, so should profits, so should earnings, so should values. 

Hopefully last year wasn't our 1st year of retirement.  SP lost like 22% and inflation rose about 6%. Double ouch.  

As someone FI from RE but still building my SP/ market portfolio, the drop was beneficial.   It was beneficial to anyone stil in the growth phase of SP building.  Tough to realize in the moment watching our portfolio values drop. 

IMO the only better or equal to inflation protection investment out there of course is RE.