Our calculators have been updated with 2025 data for CPI, S&P 500, bond, and cash returns.

The story of 2025 was much like 2025 - great stock market returns, and lower but still not satisfactory inflation, and ho-hum returns for bonds. The Fed cut rates from 4.25% down to around 3.5% shooting for a tricky "soft landing". 2025 had inflation to worry about on one hand, and on the other rising unemployment and surging layoffs. In 2025 inflation ran at 2.7%, even though things like health care, education, and housing sure feel WAY more expensive than normal. On the plus side gas prices have dropped to a 5 year low.

As a result of the Fed's easing policy mortgage rates are now in the low 6% zone, which is better than 7% of last year but still not helping with affordability.

One unexpected trend was precious metals like Gold and Silver going off the rails with once in a generation returns.

2025 raw numbers:

•  The CPI (consumer price index) increased by 2.7%. At least inflation is going in the right direction but it is still considered elevated. The Fed has more work to do. 
   
• The S&P 500 had a 17.8% return.
   
• The 90-day T bill had an average return of 4.2%.
   
• 10 year Treasury Bonds returned 7.8% - their actual yield is more like 4% but rate cuts during the year helped boost the return.
   

Our retirement calculators use backtesting based on historical data since 1928. 2025 was overall a very good year to be in the markets.

When running the Retirement Withdrawal Calculator with default inputs the average resulting balance went up $3k (0.5%). The default settings are to retire with $1M (invested 70% stocks, 30% bonds), with an initial withdrawal amount of $40,000 that gets adjusted by the CPI every year, and to let it run for 30 years. 

• Average Resulting Balance    $5.30M (2017)
• Average Resulting Balance    $5.13M (2018)
• Average Resulting Balance    $5.34M (2019)
• Average Resulting Balance    $5.45M (2021)
• Average Resulting Balance    $5.60M (2021)
• Average Resulting Balance    $5.15M (2022)
• Average Resulting Balance    $5.27M (2023)
• Average Resulting Balance    $5.39M (2024)
• Average Resulting Balance    $5.42M (2025)

Other results are the same:  

• Simulations Ending Above Zero (money left over) 99%
• Simulations Ending Below Zero (money ran out early) 1%
• Simulation Low    -$202k
• Simulation High    $16.08M

In terms of the outlook for 2026, who knows which direction it will go. Some are calling for bubbles to burst (tech stocks, AI stocks, precious metals)... The US deficit keeps growing in spite of policies aimed to reduce it (DOGE, fiscal conservatism, etc). The Trump tarrifs may be reversed by the Supreme Court any day now (Polymarket has it at about 75% odds).  A new Fed chair will be installed this year as well. 

What can we take away from the 2025 update? The 4% "safe withdrawal rate" works better than ever. The more data that gets piled on the more that number appears to prove itself out.
 

Associated Calculators:

• Inflation Calculator
• Saving for Retirement Calculator
• Retirement Withdrawal Calculator
• Portfolio Allocation Calculator
   

Data Sources:

• CPI data https://fred.stlouisfed.org.
• Stock market, bonds, and cash returns are from Professor Damodaran's Historical Returns spreadsheet.