How LongSpan chooses your default rates

Updated 8 Oct 2026

A new plan starts from these. They’re estimates for the next 30 years or so, and you can change any of them for your own plan: stocks, bonds and cash are three rates of their own on the accounts step, and every account earns from them.

Your market return follows a mix of stocks and bonds that changes as you near retirement, so it isn’t one figure: at the default rates, 6.3% a year early on, 5.5% at retirement and 5.1% later, with inflation included. Change the stock or bond rate and the whole mix moves with it. The lifetime mix below says how, and how an account earns says what each of your accounts makes of these rates.

In October 2026 LongSpan moved plans still on its earlier starting rates to these. Any rate you had set yourself stayed as it was: a market return you had set as one figure became the stock rate that has your mix earn that figure this year.

From 1928 to 2025, a portfolio of 85% stocks and 15% bonds returned 9.5% a year, 6.3% after inflation, and the last 40 to 50 years did better still. Much of that happened once. Interest rates fell from about 15% in 1981 to near nothing by 2021, and investors went from paying about 8 times a decade’s average earnings for stocks to about 40 times today. Neither can repeat from here, so history’s averages are a ceiling for the decades ahead, not a middle.

Instead, each rate is built from what markets price in today, and history fills in what today’s prices can’t say.

The inputs, as of 6 Oct 2026, are Treasury yields and expected inflation from the Federal Reserve Bank of St. Louis’s FRED database, stock prices, dividends and earnings from Robert Shiller’s data (October 2026), and the Social Security Trustees’ 2025 long-range assumptions.

• Stocks, 4.0%. What companies pay out now (1.1% in dividends plus about 1% in net buybacks), plus history’s growth in earnings (2.5%), less about 1.0% a year as prices drift from 40.7 times a decade’s earnings back toward 30 over 30 years. That gives 3.6% to 4.6%. Other common readings span 2.5% (prices returning all the way to history’s middle) to 5.4% (prices staying at today’s record high for good). 4.0% assumes neither. The buyback figure is an estimate, so this is the rate most open to judgement.
• Bonds, 2.0%. Inflation-protected Treasuries pay 2.91% above inflation over 10 years and 3.35% over 30, well above the 1.5% that 10-year Treasuries returned after inflation from 1928 to 2025. A bond bought now earns today’s yield, but the bonds a plan buys in 10 or 20 years earn whatever yields are then, so 2.0% keeps part of today’s yield for the first decade and history’s level after it.
• Cash, 0.75%. Treasury bills pay 4.04% now, 1.7 points above expected inflation. From 1928 to 2025 they averaged 0.4% after inflation, and most estimates of the long-run neutral rate sit between 0.5% and 1%.
• Inflation, 2.4%. What the bond market expects over the next 10 years (2.36%) and the 5 years after the next 5 (2.35%).
• Pay, 3.6%. The Social Security Trustees’ intermediate assumption for average wages: 2.4% inflation plus 1.2 points of real growth.
• Homes, flat after inflation. US home prices rose 1.2% a year after inflation from 1928 to 2025, but Shiller’s longer index, from 1890, finds close to nothing, and the recent figure leans on the last 30 years.

Most retirement savers aren’t invested the same way for 50 years. The Department of Labor’s rule on default investments for workplace plans describes a target-date fund as one that changes its mix of stocks and bonds with your age or retirement date (29 CFR 2550.404c-5). The industry’s funds start near 90% stocks and hold 40% to 50% at retirement (Morningstar).

By default, LongSpan is based on the most widely held of them, Vanguard’s Target Retirement path, counted from your own retirement age rather than from 65. Each year’s market return is what that year’s mix earns at your plan’s stock and bond rates: by default 6.5% and 4.45% a year, which are 4.0% and 2.0% after 2.4% inflation.

You can choose one of two published paths, or set your own. The figures beside each are at the default stock and bond rates:

• Most common, the default, is based on Vanguard: 90% stocks until 25 years before you retire, 50% at retirement and 30% from 7 years after. 6.3%, 5.5% and 5.1%.
• Settle at retirement is based on BlackRock LifePath Index: 100% stocks until 30 years before, then 40% from retirement on. 6.5%, then 5.3%.
• Your own schedule is the share of stocks you choose, from the years you choose. It changes only in those years, all at once, rather than a little every year, and before your first year it holds your first share. It starts from the path you were on, for you to change.

The two published paths sit near either end of what the industry’s funds hold at retirement, about 36% to 57% stocks.

LongSpan uses each schedule’s split between stocks and bonds, timed to your own retirement age. It doesn’t copy the funds themselves: they also divide stocks between countries and hold kinds of bonds LongSpan doesn’t model, and the schedules move a little differently between the ages shown.

Your plan keeps two things apart: what markets earn, which is an assumption, and how each account is invested, which is a fact about it. The rates above are the assumption. Each retirement, investment, education, health and bank account says how it’s invested, in one of three ways:

• Your plan’s mix, the lifetime mix above, year by year. Invested accounts start here.
• A fixed mix of stocks and bonds, such as 60% stocks, that stays the same every year.
• Cash, which earns the cash rate if it earns interest and nothing if it doesn’t. Savings, money market accounts and CDs start as cash that earns interest; a checking account starts as cash that doesn’t.

Each year an account earns its share of stocks at the stock rate, its share of bonds at the bond rate and its cash at the cash rate, less any annual fee you set for it. So if you expect more of stocks, change the stock rate once and every account holding stocks earns more. An account has no rate of its own. Your home and other property grow at the property rate, and equity grants at the growth you set for the shares.

The market range runs your plan through 500 sequences of what US markets did from 1928 to 2025, taken in runs of about 10 years in a row. Every value in a year, stocks, bonds, bills, prices and home prices, comes from the same past year, so a crash keeps the inflation and the rates that came with it.

The swings are history’s, but the middle is LongSpan’s rates: each series keeps every year’s rise and fall, with its average over the whole record moved to the default rate above. The range never reads the rates you set. Each account holds what you said it holds: your plan’s mix that year, its own fixed mix, or cash, which earns what Treasury bills did if it earns interest and nothing if it doesn’t. Property earns what home prices did, unless you set it to hold its value, and equity grants earn what stocks did.

Your forecast does use your rates. So a plan on the defaults sits near the middle of its range, and a plan whose rates are more hopeful or more cautious than LongSpan’s shows it: where your forecast sits measures your rates against these.

“Your forecast at retirement is at the 44th percentile: 222 of the 500 paths end lower, 278 higher” means that in 222 of the 500 replayed sequences your net worth that year ends below the forecast’s. A forecast near the 50th percentile sits in the middle. One near the 99th rests on rates more hopeful than these, and one near the 1st on more cautious ones.

The bands on the chart run from the 10th to the 90th percentile and from the 25th to the 75th. They are worked out year by year, and a single path can move between them. More on reading the chart.

LongSpan reviews these rates once a year, and sooner if an input moves sharply: a 10-year yield moving a full point, or the price of stocks against their earnings moving by 5. A rate changes only when the working moves it by 0.25 points or more, so the defaults don’t twitch with every month’s markets. The date at the top says when they were last reviewed.

These are assumptions, chosen by the method above. They aren’t predictions of what markets will do, and they aren’t advice about how to invest. Every figure LongSpan shows from them, the forecast and the market range included, is hypothetical: it shows what your plan comes to if these assumptions hold, or if markets move as they did in the past.

The stock rate is the one most open to judgement; reasonable methods give anything from 2.5% to 5.4% above inflation. If you see it differently, set your own stock rate and see where your plan lands in its range.