7% is historical for S&P500, but that's with 3% average inflation. His point is that 5% real returns are, in fact, generous.

No he said 5% 'is in future dollars', i.e. not inflation adjusted to a present value... When in reality the nominal S&P500 returns are 10% leading to the same 'future dollars'. That is conservative.

Plus if 7% real returns (after a 3% inflation) is the historical average, how is 5% real returns generous? That's still conservative even if he meant to claim a 5% real return.

Especially generous if you account for official inflation numbers doing a terrible job at representing income to cost of living ratio