With benzema gone, kroos and modric getting older and potentially leaving real madrid team will have a significant performance drop in my opinion no matter what players they recruit they can't replace these trio unless they put on some money and they manage to sign some man city or bayern players like kimmich or de bruyne which is unlikely i think the next season will be more tough for real madrid.
I think you underestimated Madrid in this regard.
Even if you are not wrong because there will definitely be conditions where it is a little complicated for Madrid, but the decline in terms of performance I think is not what can be called for Madrid.
They clearly know what they are doing and indeed for now even if Modric and old Kroos they are also still in Madrid for another season so they can still help and the young players in regeneration can still be done.
Madrid is still Madrid even if their core players leave but they can always find replacements that are just as good.