A recent Wall Street Journal blog post by David Blanchett, head of retirement research for Morningstar Investment Management, suggests it is a mistake to base expectations for future returns on past performance. What rate of return is your financial planner (or online calculator) assuming?
"If bonds are yielding about 2%, and a reasonable equity risk premium is
4%, the expected return on large U.S. stocks is probably somewhere in
the neighborhood of 6% for the medium-term future (let’s say the next 10
years). If we assume inflation of 2.5% and fees of 0.5%, your expected
inflation-adjusted return in a tax-advantaged account (like an IRA) is
probably less than 3%. Ouch. If we include taxes in the mix the expected
return is less than 2%. Double ouch." http://blogs.wsj.com/experts/2016/03/31/what-stock-market-return-should-your-financial-plan-assume/