The market has been kind lately—so kind that 10 % a year feels like the universe’s way of saying thank you simply for showing up. Statements arrive with the placid confidence of a late-summer sunset, and the number at the bottom swells faster than the groceries pile up. It is easy to start believing the index is a generous uncle who never misses a birthday, easy to sketch out the decades with a simple compound-interest cloud that drifts gently upward until it covers every future mortgage payment, every grand-tour cruise, every private college tuition folded inside a crisp envelope. That belief is human, and it is dangerous, because the market’s kindness is not a promise; it is a weather pattern, and weather still changes.
History whispers that 10 % is an average stitched together from wars that closed exchanges, from decades that ended lower than they began, from mornings when traders opened the paper to find their fortunes trimmed by a third before coffee cooled. The same century that delivered ten percent also delivered the Great Depression, the stagflation seventies, the dot-com implosion, the 2008 winter when retirement accounts became ice sculptures. Each collapse felt, to the people living inside it, like the end of the world rather than a data point on a long road that eventually climbed again. The climb is what we remember now, but the fall is what we must plan for, because the next fall will insist it, too, is the end of the world, and our groceries will still need buying.
Living off investments is less a math problem than a trust exercise with time itself. The safe withdrawal rate—four percent, three and a half, whatever scripture you follow—was never calibrated on the assumption that every year would gift you ten. It was calibrated on the scarier premise that some years would steal thirty, and that the theft would arrive early in retirement when your portfolio was fat and your timeline looked endless. A 30 % hole dug in year two does not simply rebound in year three; it meets the same dollar of spending it met before, only now that dollar is withdrawn from a smaller base, and the base must stretch further because you are still alive. The damage compounds in the wrong direction, and the only cushion is the conservative slope you built back when ten percent felt inevitable.
Conservatism, then, is not pessimism; it is memory. It remembers that valuations climb faster than earnings for long stretches, that today’s price-to-earnings ratio is politely suggesting lower rainfall ahead, that the past forty years’ tailwind of falling interest rates cannot be repeated from these levels without lenders paying borrowers for the privilege of debt. It remembers that the United States, for all its entrepreneurial magic, was once a single country among many that have seen centuries of prosperity erased by invasion, revolution, or plain bad policy. Diversification helps, but diversification does not repeal gravity; it only spreads the bruise.So treat the 10 % for what it is: a sunny decade, not a lifetime contract. Build the budget as though the portfolio will deliver half that over the next forty years, and save the surplus when the sun still shines. Hold more cash than feels cool, more bonds than feels thrilling, more international exposure than feels patriotic. Let the equity allocation remain large enough to outrun inflation, but not so large that a fifty-percent crater forces you to sell the canoe in order to buy groceries. Work one year longer than the spreadsheet says you must, not because you love the commute, but because the extra year is an insurance premium against the moment the world decides that liquidity is more valuable than vision.
When friends brag about their all-index, all-the-time retirement, smile and wish them well. Quietly keep your umbrella open. The rain they believe will never come has already fallen on other generations; it is only the calendar’s turn that keeps us dry. Plan as though the clouds remember their old habits, and you will not have to pray for mercy when the sky finally does.
