The average return of the S&P 500 is around 10%, although you will see people use 7% as a shortcut to account for inflation when estimating the future value of their portfolios.
The citation of 7% as the true return isn't a "shortcut", though a nominal return of 10% could be argued to be, but an acknowledgement that total returns are not real without accounting for inflation. If an hypothetical index in a developing country rises by 50%, but inflation is 100%, then even though the nominal index returns may look impressive, it has actually had a negative real return, as the real inflation-adjusted value has decreased. The use of nominal terms for market returns is money illusion.
For the 50 year period from January 1974 to January 2024, the annualized inflation adjusted real return of the S&P 500 has been 7.04%, which is not a shortcut, but simply correct. The nominal annualized total return has been 11.14%, but it is an illusory return of value without being inflation adjusted.
The average return of the S&P 500 is around 10%, although you will see people use 7% as a shortcut to account for inflation when estimating the future value of their portfolios.