I have always been a little suspicious of averages.
An average is a tidy number. It sounds settled, almost comforting. The trouble is that an average describes a crowd. It rarely describes you, and it almost never describes any single moment along the way.
Let me show you what I mean, using two things that could not seem more different. A human life, and the stock market.
Start with the life.
The life expectancy tables say the average American man lives about seventy-six years, and the average American woman about eighty-one. Both are real numbers, carefully measured. And neither one describes a single actual person. I have never met an average man or an average woman, and I doubt you have either. Nobody lives seventy-six or eighty-one years of average days. We live the specific ones, the days that actually happen to us.
When I first held my own life up against that number, it stopped me for a moment. It did not make me anxious. It made me pay attention. It made me ask what I want the years ahead to hold.
I believe money works the same way.
Here is the part people find hard to accept. Over the 100 years from 1926 through 2025, the U.S. stock market returned about 10 percent a year on average.
So how many of those hundred years actually delivered something close to that average, say a return between 8 and 12 percent, within a couple of points of that average?
Six.
Six years out of a hundred. In the other ninety-four, the market finished either well above that range or well below it, sometimes wildly so. Up thirty, down twenty, up eighteen, down thirty-seven, on and on. The average year turns out to be one of the rarest years there is.
That is why I say average is not normal. The average is real, but almost no single year looks like it. If you plan as though every year will hand you a smooth ten percent, you are planning for a year that has shown up about six times in the last hundred.
And the order matters most at exactly the moment you would least want it to, when you retire and begin living on the money.
Picture two people. Each retires with one million dollars. Each takes sixty thousand dollars a year. Each earns the very same six annual returns, and the same 6.7 percent average. The only difference is the order those returns arrive.
The first person meets the rough years early, right after the withdrawals begin. The second person meets those same rough years last. Six years later, the first person has about 855 thousand dollars. The second has about 1.06 million. Same average, same withdrawals, and a difference of roughly 200 thousand dollars, decided entirely by sequence.
You cannot control the order the market hands you. You can build a plan that is ready for a rough stretch early, so a bad patch does not harden into a permanent loss.
I have managed money through four recessions, two market crashes, and a pandemic. Not one of those years was average. My clients did not panic through them, because we never built anything on the assumption that they would be.
So I will leave you with the question I asked myself.
What do you want the years ahead to add up to? And is your money built for the life you actually have in mind, or only for the average one?
If that is a conversation you would like to have, I would be glad to have it.
Disclosure: This article is for educational purposes only and is not investment, tax, or legal advice. Market figures reflect the S&P 500 total return, including reinvested dividends, for 1926 through 2025 (source: S&P Dow Jones Indices; Ibbotson/Morningstar). The retirement example is hypothetical and does not represent any specific investment. Past performance is not indicative of future results. Indices are unmanaged and cannot be invested in directly. Fundamental Advisors, Inc. is a registered investment adviser.