By Jason Heath, CFP on May 22, 2026 Estimated reading time: 4 minutes

What are reasonable long-term financial planning assumptions? 

By Jason Heath, CFP on May 22, 2026 Estimated reading time: 4 minutes

What inflation, investment return, and life expectancy assumptions should Canadians use for retirement planning? Here’s what financial planners recommend.

Retirement projections are only as reasonable as the assumptions behind them. If your inflation, investment return, or life expectancy estimates are unrealistic, your financial plan may give you a false sense of security.

Studies often show that investors are overly optimistic about future rates of return. This is particularly true coming off a strong showing for stocks like we have seen over the past year. 

The total return for the S&P/TSX Composite Index over the last 12 months has been 34%. The S&P 500, in Canadian dollars, has returned 24%. Over the past decade, annualized returns for these indices were 13% and 16% respectively—but financial planners are not counting on the same success going forward. 

The FP Canada Standards Council and Institute of Financial Planning update their Projection Assumption Guidelines each April. These guidelines apply to Certified Financial Planners (CFPs) and Québec Planificateur financiers (Pl. Fin.). They are worth considering for Canadians who are making assumptions about their own financial futures. 

Inflation got a little interesting in Canada in 2022, with the year-over-year annual average Consumer Price Index (CPI) inflation rate hitting 6.8%. For most of the last 30 years, it has been steady in the 1% to 3% range, which is the Bank of Canada’s target.

When you are running long-term projections, you cannot........

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