I've had a Vanguard account since 1997. 500 index. Put the minimum in at the time and never touched it since. I do not have 12% annualized returns.

Indeed, I just checked portfolio visualizer, which gives a 1997-2020 return of 8.5% CAGR for the 500. My guess is you started adding in 2007 (so your principal was very small during the great financial crisis) and you've been adding during the entire recovery. You don't know how lucky you are. Of course, maybe you just bought QQQ in 1997. Again, you don't know how lucky you are.

The number of fallacious assumptions embedded in your syllogism is difficult to unpack. I'll start with one, past returns are not indicative of futures results. I'll add another, the relative expensiveness of stocks at a given point in time are negatively correlated to long-term future returns. Someone won a nobel prize by illustrating the last one.

Yes, I started that account in early 2007, painfully added through the financial crisis, and just kept on adding. At some points I was adding over $1K/week, every week, year after year. I invested heavily in growth (VGT and MGK ETFs, specifically) which boosted my returns, especially over the past 5 years.

Of course, past returns are not indicative of future results. Of course, stock prices are expensive right now. But what is the alternative? CDs? Bonds? Look at any long term chart. I'll take the risk.

>Look at any long term chart. I'll take the risk.

There are 30 year periods where US stocks (spy 500 or a close proxy thereof) posted a negative total return. Are you prepared for that?

My larger point is that 12-15% return assumption is absurd. There are very few long-term periods where that has ever been achieved in the US market, most (but not all) of which were followed by a deep and long-lasting correction.

The alternative is to assume a lower return like 5% and plan accordingly.

Despite these huge gains over the past 10 years, I do agree with you. I plan for a 3.5% withdrawal rate during retirement (hopefully early retirement.)

You can still plan for a 3.5% withdrawal rate and be way off of what you need to retire if you are assuming a 12-15% return rate.

I already hit my FIRE goal, so not a problem for me.

Good for you, but your FIRE goal either explicitly or inherently assumes both an inflation rate and an expected return rate. It is crazy to ignore both as you seem to be doing with your statement that you are safe from failing to meet 12-15% returns simply because you are assuming a 3.5% withdrawal rate. In addition to inflation and expected return, you also should consider max draw down potential.