Investors in retirement have never had it so good. Individual retirement accounts and company 401(k) plans have been booming for a decade now, thanks to the stock market’s euphoric rise.

But, before we become complacent or believe this is normal, a timely new warning arrives. And it comes from beyond the grave, from the late, great Vanguard founder Jack Bogle, who was a staunch supporter of the Mom and Pop investor and buy-and-hold index investing. Bogle passed away in 2019.

We’ve seen this movie before, as Bogle will remind us in “In Pursuit of the Perfect Portfolio,” a book on investing that will be published by Princeton University Press later this year. The “speculative return” on US stocks has “gone up and down and up and down” over the last century, according to Bogle, and it always ends up back where it started. “If you look at the history of American business over the last century, you will discover that the [price/earnings] effect of stocks is zero,” he says.

It doesn’t simply mean that “what goes up must come down,” but that stock returns, according to Bogle, can only come from three sources: dividends, earnings growth, and these “speculative returns.” And the speculative returns that we’ve all been enjoying for years have always, always reversed.

Andrew Lo of the Massachusetts Institute of Technology’s Sloan School of Management and Stephen Foerster of Western University’s Ivey Business School collaborated on Perfect Portfolio. According to Bogle, the current stock boom in retirement accounts will wash out in the coming years, wiping out some or all of investors’ recent returns. It’s worth pausing to consider how good things have been for investors over the last decade.

Since 2010, the Vanguard 500 Index Fund, Fidelity 500 Index Fund SPDR 500 ETF Trust, and iShares Core S&P 500 Trust, which all track the S&P 500 large company index, have produced annual returns averaging 14 percent. Over the last five years, that figure has risen to a startling 17 percent per year.

The Vanguard Total US Stock Market Index Fund, which includes midsize and smaller US companies as well as the largest 500, has risen roughly in lockstep with the S&P 500. Meanwhile, American Funds’ massive Growth Fund of America has averaged a 15% annual return over the last decade. Since 2010, the Invesco QQQ Trust, which tracks the Nasdaq-100 index and is heavily invested in hot stocks such as Apple, Microsoft, Amazon, Tesla, Facebook, and Alphabet/Google, has returned an astounding 20% per year on average.

And this year has already been quite successful. The S&P 500 is already up 11%, though growth and technology funds are trailing for the first time. The gains on the S&P 500 over the past decade equal about 12% a year above the level of inflation.

Bogle, as Lo and Foerster point out, made stock market predictions. He mentioned his “Bogle Sources of Return Model for Stocks,” abbreviated BSRM/S. For example, in 2007, he successfully predicted that the Dow Jones Industrial Average would reach 20,000 within a decade.

According to FactSet data, the dividend yield on the S&P 500 is currently around 1.5 percent. This is calculated by comparing today’s share prices to expected dividends in 2022, when companies will be on a more stable footing following the Covid crisis.

Add those two together, and Bogle’s model predicts 5% annual growth—which is still fine, but for two reasons. Inflation is now expected to average 2.7 percent per year over the next five years, bringing the actual real, post-inflation return to around 2.3 percent. This is a far cry from the previous decade’s figure of 12%.

Then there are the “speculative returns.” If Bogle is correct, we will have to give those back, further reducing annual gains. The S&P 500 is currently trading at 20 times expected earnings per share for the coming year, 2022. The historical average is 16 times projected earnings per share for the current year. That disparity has the potential to wipe out all dividends and earnings growth over the next five to ten years.

All of this also assumes that workers, retirees, and the government in the United States do not take a larger share of annual GDP than they have in the past. According to one measure, after-tax corporate profits account for about 10% of GDP—roughly double what they did during the Reagan administration.