I'm having difficulty reconciling your assumption of a 7% net expected return with an asset allocation that would be appropriate for a 65 y.o. investor contemplating retirement.

When considering the reasonableness of this figure, we need to consider that most developed capital markets have reached maturity, meaning that expected returns will almost certainly be lower than historical returns.

When we frame the issue of lower expected returns as being uniquely connected to lower interests, we ignore other important trends such as aging demographics, rising valuations, moderating volatility, and low inflation.

When all these influences are viewed synoptically, the best-fit explanation is that economies and capital markets go through phases of maturity. If this hypothesis is correct, then extrapolating expected returns from historical returns is like extrapolating developed market returns from emerging market returns: a downward adjustment is required to account for risk differentials.

Notice that under this hypothesis the source of the adjustment is not transient in nature, its structural: Expected returns are lower because they are simply not as risky as historical returns.

By extension of this logic, there is no good reason to believe that expected returns will revert to their historic averages at some point in the future.

Indeed, I believe that such logic is macro-inconsistent: For it to be valid, interest rates and volatility would have to continue trending towards zero and valuations would have to keep trending towards infinity.

Of course, my hypothesis could be proven entirely wrong, only time will tell.

My point is this: When planning for retirement, investors should behave as though this worldview was correct. If they are proven wrong, they can always make a Personal Financial Adjustment (PFA) to spend more, donate to charity or leave an estate.

Making a PFA in the other direction is far more difficult and less enjoyable.