Open any FIRE blog and you will see two numbers thrown around like they mean the same thing: 10% and 7%. One is the headline. The other is the one that actually pays your bills.

The S&P 500 has averaged roughly 10% per year before inflation since 1928. That is a real number — not marketing. But it hides two things that quietly eat the headline: inflation, and the order in which returns arrive.

10% nominal, ~7% real

Inflation in the U.S. has averaged about 3% per year over the same period. Subtract that from 10% and you do not get 7% — you get roughly 6.7%, because subtraction is not compounding. The precise real return is closer to 6.5 to 7.0% depending on the window. We round to 7%.

Why round up? Because the alternative — modeling 6.5% — invites a false sense of precision. returns are not a constant; they are a distribution. The right move is to use a number that is defensible, rounded honestly, and stress-tested against bear markets. 7% real is the conservative-ish middle of what U.S. equities have actually delivered.

Why not just use 10%?

Because a dollar in 1980 is not a dollar in 2025. If you model 10% growth on a $40,000 lifestyle without adjusting for inflation, your plan silently assumes today's prices, forever. A loaf of bread will cost what it costs now. It will not.

Real return is the only number that matters for FIRE planning: it is what your portfolio actually buys, in today's dollars, after inflation has eaten its share every year.

But the bigger risk is sequence

Even 7% real hides the thing that actually sinks retirements: sequence of returns. Two portfolios can both average 7% over 30 years and end up wildly different depending on which years were bad.

If the market drops 30% in your first year of withdrawal, you are selling shares at a discount to fund your life. Those shares never recover — they are gone. A 7% average spread evenly is very different from a 7% average that starts with a -20% year.

The 4% rule exists because the Trinity Study ran 30-year retirement windows across every historical sequence and found that 4% withdrawals survived even the worst starting years. 7% growth is the average. 4% withdrawal is the floor that survives the bad years.

Three presets, three temperaments

On every Coast FIRE calculator you can switch between three return presets:

  • Conservative · 5% real — assumes a heavier bond allocation or a less favorable future. Use this if you would rather work a year longer than worry.
  • Balanced · 7% real — the historical equity average, rounded. Our default.
  • Optimistic · 9% real — assumes strong equity returns and modest inflation. Use this to dream, then re-run with 5%.

So why do we keep showing 10%?

Because it is the number people recognize. Headlines use it. Friends cite it. It is not wrong — it is just nominal. The job of this article, and of every calculator on this site, is to translate that headline into the only number that matters for your plan: what your money actually buys, after inflation, in the worst plausible sequence.

That number is closer to 7% than 10%. Use it.