The 2026 return assumptions professional planners use
Every retirement projection stands on one quiet input: the return you assume your money will earn. Assume a point too much and a plan that “works” on screen fails in real life. So it’s worth knowing that Canada’s financial planning bodies publish an answer sheet — and that this year’s edition trimmed the numbers again.
Each spring, FP Canada Standards Council and the Institute of Financial Planning jointly publish the Projection Assumption Guidelines: the return, inflation, and longevity assumptions that professional planners across Canada are expected to use (or justify deviating from) in any projection running ten years or longer. The 2026 edition landed in April. Here’s what it says, what changed, and how to check your own plan against it.
The 2026 numbers
All returns are nominal (before inflation) and before fees — more on that below.
| Assumption | 2026 guideline |
|---|---|
| Inflation | 2.1% |
| Salary / YMPE growth | 3.1% (inflation + 1%) |
| Shelter cost growth (new) | 3.1% (inflation + 1%) |
| Short-term (cash) | 2.4% |
| Fixed income | 3.2% |
| Canadian equities | 6.3% |
| US equities | 6.4% |
| International developed equities | 6.6% |
| Emerging market equities | 7.5% |
| Borrowing rate | 4.40% |
Planners can deviate within ±0.5% of these rates and still comply with the guidelines. Anything beyond that requires a reasonable, documented explanation — a deliberately high bar against the oldest failure mode in the business: nudging the return assumption up until the plan “works.”
What changed this year
Equity assumptions were cut across the board. Canadian equities dropped to 6.3% and US equities to 6.4% (both were 6.6% in the 2025 edition), international developed markets slipped from 6.9% to 6.6%, and emerging markets fell from 8.0% to 7.5%.
Inflation held at 2.1% — a deliberate long-run anchor. The guidelines themselves note that Canadian CPI averaged 3.9% over the five years to December 2025 and 2.5% over ten. For a projection spanning decades, the committee treats the recent inflation surge as exactly that: recent, not permanent.
The other addition is a shelter projection assumption of 3.1% — housing costs now get their own growth line rather than riding the general inflation number. If rent or a future home purchase is a large share of your retirement spending, that gap (3.1% vs 2.1%) compounds meaningfully over 25 years.
The part everyone skips: fees come off the top
The guidelines are blunt about this: every return above is gross, and “the administrative and investment management fees paid by clients both for products and advice must be subtracted to obtain the net return.”
The document’s own worked example makes the point better than any argument. Take a conservative balanced portfolio — 45% fixed income, 40% Canadian/US equities, 10% international, 5% cash. The weighted gross return works out to 4.8%. Subtract the example’s 1.3% in fees and the planning number is 3.5% nominal — about 1.4% real after the 2.1% inflation assumption.
That’s the defensible professional baseline for a fee-heavy balanced portfolio. If your projection assumes 8% on a similar mix, you’re not planning — you’re hoping.
What this means if you’re in the US
There’s no direct US equivalent of the guidelines — no US standards body publishes a single prescribed assumption set — but the discipline ports directly: use a forward-looking number, not a rearview one; subtract your actual fund fees; and note that the guideline pegs US equities at 6.4% nominal, a long way below the “stocks return 10%” folk figure. Our guide on what return you should assume unpacks why the century-long US record overstates what a diversified portfolio should plan on.
How to pressure-test your own plan
You don’t need to adopt the guidelines wholesale — the right move is to know what your plan assumes and what happens if the professionals’ numbers turn out to be right.
- Find your current assumption. cinder.fi’s retirement calculator defaults to 6% for tax-sheltered accounts, 5% non-registered, and 2.5% inflation — deliberately in the defensible band, slightly conservative on inflation.
- Run a guideline-grade scenario. Create a scenario with a blended return matching your actual asset mix at the 2026 rates (minus your real fees) and see what it does to your retirement age and estate. If the plan only survives at your optimistic number, that’s worth knowing today, not at 71.
- Let randomness in. A single average hides sequence risk. Monte Carlo simulation runs your plan through thousands of return sequences, and historical backtesting replays it against every market since 1871.
- Check the longevity assumption too. The guidelines recommend planning to the age where survival probability is still 25% — for a 70-year-old couple, that’s one member reaching age 98. A great return assumption doesn’t save a plan that ends at 85.
The guidelines exist to keep professionals honest about the future. They work just as well on a spreadsheet — or on us.