The USA Plan Spreadsheet
ROI of S&P500 1871-2020
In order to predict the average rate of return a taxpayer might receive for their 40-year working life, we choose the annual percentage increase in stock value of the entire S&P 500 stock index. Standard and Poor began keeping data in 1871. The first year in which an average 40-year average could be taken was in 1911 (the average for the years 1871 through 1910).
Below we list the 40-year average for each of the 110 years 1911 through 2020.
So, when you look at the chart for the year 1925, it states that the forty-year average in the S&P500 was 10.4 per cent. That means a 65-year-old retiree would have realized a10.4 percent annual increase in his stock portfolio for his working life from 1885 through 1924.
The highest rate of return was for the year 1999. In that year, a retiree would have realized a 17.3% on his investment of payroll taxes for each of the years from 1959 through 1998. See here for how that turned out.