Ready For Retirement – Episode Summary
Episode Title: Will Low Returns Ruin Your Retirement? (How to Interpret Goldman Sachs 3% Forecast) | Root Talks
Host: James Conole, CFP®
Original Air Date: October 23, 2025
Episode Overview
This episode tackles the anxiety many pre-retirees and retirees face following new forecasts from investment giant Goldman Sachs, which predict an annualized nominal total return of just 3% for the S&P 500 over the next decade. James Conole and co-host Grant (“Ari” in transcript) address concerns about what happens if portfolio returns fall short of expectations, discussing the implications for early retirees, particularly those thinking of retiring around age 48, and what practical steps can be taken to create resilient retirement plans even under unfavorable market conditions.
Key Discussion Points and Insights
1. The Uncertainty of Return Forecasts
- (01:24–04:15) James emphasizes that no institution can predict the next ten years of returns with any certainty, despite research from highly respected entities like Goldman Sachs and Vanguard.
- "No one has any idea what the next 10 years are going to look like...I would be wary of relying too heavily on one or even all of these research papers or studies that try to predict that."
— James (02:10)
- "No one has any idea what the next 10 years are going to look like...I would be wary of relying too heavily on one or even all of these research papers or studies that try to predict that."
2. Stress-Testing Your Retirement Plan
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(04:16–07:07) Instead of trying to predict the market, James urges listeners to plan for a variety of scenarios, including worst-case returns and higher inflation, by running projections with different assumptions:
- Historical S&P 500 return: ~10% annualized, with ~3% inflation (real return ~7%).
- Test plans with real returns at 4%, 1%, and consider the impact of higher expenses or medical costs.
- Understand the value of adaptable planning over predictive accuracy.
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On the 4% Rule: The so-called "safe withdrawal" rate was established based on the worst periods in US market history, not as a guaranteed future benchmark.
- "When [Bill Bengen] is saying 4% rule, what he's saying is that's what you could have taken even under these [worst] circumstances, at least historically speaking."
— James (06:12)
- "When [Bill Bengen] is saying 4% rule, what he's saying is that's what you could have taken even under these [worst] circumstances, at least historically speaking."
3. Planning for Both Risk and Regret
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(07:07–10:01) Grant (Ari) shares a client story illustrating the psychological balance between saving aggressively and enjoying resources in retirement. The goal is to avoid both running out of money and dying with unspent potential.
- "The greatest fear that I have is I retire early and run out of money. The second fear is...I look back being 85 years old, mad at James and mad at me going, why didn’t you guys tell me I should have spent more..."
— Grant (07:17)
- "The greatest fear that I have is I retire early and run out of money. The second fear is...I look back being 85 years old, mad at James and mad at me going, why didn’t you guys tell me I should have spent more..."
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Key takeaway: The habits that serve you while accumulating wealth (maxing out contributions) aren't always the same ones you need as you approach retirement, especially as investment returns start to do more of the heavy lifting.
4. The Role of Market History in Planning
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(10:01–12:30) James asks listeners to imagine experiencing the four worst years of returns (the start of the Great Depression) and uses this to underscore how the 4% rule is designed to survive even extreme sequences of returns.
- "Those aren’t arbitrary returns. Those were the four consecutive returns...Had you retired in 1929, right before the Great Depression hit, that is what the US market did. Those are devastating returns."
— James (11:22)
- "Those aren’t arbitrary returns. Those were the four consecutive returns...Had you retired in 1929, right before the Great Depression hit, that is what the US market did. Those are devastating returns."
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Emphasizes that diversification is critical: periods after extraordinary US equity returns (like the last 15 years) are statistically more likely to revert to mean or underperform.
5. Diversification: Boring but Essential
- (12:31–15:10) James warns against over-concentration in recent winners (like US large tech stocks), especially just before retirement.
- "Diversification seems like such a boring thing over the last 15 plus years when all you had to do is choose US large tech stocks and you did insanely well...I'm not sure I would stay invested that way as you go into retirement."
— James (14:35)
- "Diversification seems like such a boring thing over the last 15 plus years when all you had to do is choose US large tech stocks and you did insanely well...I'm not sure I would stay invested that way as you go into retirement."
Notable Quotes & Memorable Moments
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On the futility of prediction:
"No one has any idea what the next 10 years are going to look like...I would be wary of relying too heavily on one or even all of these research papers or studies that try to predict that."
— James (02:10) -
On the 4% rule:
"That's worst case scenario. That's if you retired...right before you had a prolonged period of negative, of really poor returns."
— James (05:30) -
On regret minimization:
"The greatest fear that I have is I retire early and run out of money. The second fear is...I look back being 85 years old, mad at James and mad at me going, why didn't you guys tell me I should have spent more..."
— Grant (07:17) -
On sequence of returns risk:
"Those aren’t arbitrary returns. Those were the four consecutive returns...Had you retired in 1929, right before the Great Depression hit..."
— James (11:22) -
On the need for diversification:
"You cannot overstate the importance enough of being diversified, of having the right investment strategy going into retirement."
— James (14:25)
Important Timestamps
- [02:10] — James: No one can accurately predict future market returns.
- [05:30] — James: 4% rule is designed for worst-case scenarios.
- [07:17] — Grant: The dual fears of running out of money or underspending in retirement.
- [11:22] — James: The retirement math during the Great Depression.
- [14:25] — James: Critical importance of diversification, especially approaching retirement.
Final Takeaways
- Forecasts are just that—forecasts. Don't place too much stock in any prediction about market returns, be it optimistic or pessimistic.
- Stress test your retirement. Run plans for a range of outcomes, from strong returns to significant downturns, and have backup plans for each.
- Diversification is your friend. Even when it's felt unnecessary during boom times, broad and sensible diversification across asset classes is vital, particularly as you approach retirement.
- Enjoying retirement is as much about flexibility as it is about safety. Avoid both ruin and regret by preparing for contingencies and living intentionally.
To interact further or suggest future episode topics, comment on their YouTube channel. For deeper engagement, James and Ari offer additional resources and discussion on their personal and Root Financial YouTube channels.