The 2026 return assumptions professional planners use
Every retirement projection depends on one 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. Canada’s financial planning bodies publish a set of assumptions for exactly this, and 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 came out in April. This post covers 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 fees 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 needs a reasonable, documented explanation. The high bar is aimed at the oldest failure 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 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 temporary.
The other addition is a shelter projection assumption of 3.1%. Housing costs now get their own growth line instead of riding the general inflation number. If rent or a future home purchase is a large share of your retirement spending, the gap (3.1% vs 2.1%) adds up over 25 years.
Fees come off the top
Every return above is gross, the guidelines say, 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 shows the effect. Take a conservative balanced portfolio: 45% fixed income, 40% Canadian/US equities, 10% international, 5% cash. The weighted gross return is 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 is the defensible baseline for a fee-heavy balanced portfolio. If your projection assumes 8% on a similar mix, you’re hoping, not planning.
What this means if you’re in the US
There’s no US equivalent of the guidelines, since no US standards body publishes a single prescribed assumption set. The discipline still applies: use a forward-looking number, subtract your actual fund fees, and note that the guideline puts US equities at 6.4% nominal, well below the “stocks return 10%” rule of thumb. 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 have to adopt the guidelines. 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. That is within the guideline 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, better to find out now than at 71.
- Add randomness. 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 1928.
- 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 good return assumption won’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 in cinder.fi.