MarketWatch called inflation “The Silent Killer for Retirement Portfolios.”

Inflation can be doubly dangerous if your portfolio only provides fixed income — keeping your cash flow steady while costs of living keep going up. And if you think it’s been painful this year, it looks even worse when you look at how much it compounds through the decades.

Go back to 1960 — six and a half decades ago. Between then and now, the average cost of living has gone up about 11 times!

What cost $1 in 1960 would cost $11 today. (Or at least, by the end of 2025 — using annual data.) That’s according to the Consumer Price Index, from the Bureau of Labor Statistics.

When you look back at what you used to pay for things when you were younger versus what they cost now, this surely isn’t so shocking.

Though if you look forward at what the next few years and decades might bring, it may be a bit worrying. Especially if you’re approaching retirement.  Especially if you’re worried about making your money last.

Considering that retirement today can easily last 20 to 30 years or more, this should absolutely be a part of your planning.

And yet — this isn’t an article meant to stoke the flames of fear.

Rather, our goal is to share another perspective.

We believe in the power of the American economic system. We believe in the power of American businesses to innovate and grow through time. Not just treading water, but real growth. Inflation-beating growth.

But what do the numbers say?

Short term, you could surely find examples where stocks don’t keep up with inflation shocks. And where other assets at least temporarily outperformed.

But if you’re looking at what could be decades of retirement, what matters most for the long run is zooming out and looking at what has happened on a similar (or longer) timeline.

We’ll use the S&P 500 Index. This gives us a huge cross-section of great American businesses that you can take a small ownership stake in, via publicly-traded shares of stock. And while the index itself is not directly investable, it gives us at least a good enough proxy of how a broadly diversified group of American businesses have performed over this long timeline.

If you think 11X inflation would be hard to overcome, you might be pleasantly surprised when you see how owning this collection of American businesses would’ve treated you.

(Remembering, of course, that this is all historical data, and past performance is not a guarantee of future results.)

First, let’s look at dividends. This is the income you would’ve received from holding these stocks — based on the value-weighted index.

While cost of living increased 11X from 1960 through the end of 2025…

The dividend income generated from the S&P 500 Index companies has grown by 40X during that time — nearly quadruple the rate of inflation.

What cost $1 in 1960 costs $11 today — meanwhile every $1 of dividend income has grown to $40. That’s not just keeping up with inflation. It’s far outpacing it.

This is based on historical data compiled by Sloan School of Business (NYU) Professor of Finance Dr. Aswath Damodaran.

So the income generated by stocks has certainly helped investors fight off inflation over the long run.

But what about the value of the portfolio itself?

Between 1960 and 2025, the value of the companies in the S&P 500 Index has grown even more — by 118X — more than 10X inflation over that period. Every $1 of company value is up to more than $118 today.

Again, you could zoom in and point to periods of underperformance. Again, what happened in the past is no guarantee of future results.

However, we believe this provides an effective illustration of the inflation-fighting power of owning productive businesses, through a diversified portfolio.

How does this apply to your retirement planning?

Of course, an article like this is written for everybody. To know how it applies based on your personal situation involves sitting down with your financial advisor, and having that conversation.

However, we believe these are helpful numbers to see and understand.

An important part of our approach is maintaining a personally-appropriate level of growth exposure, even into and through retirement years. Because retirement is a long game, you have to apply this type of long-term thinking and analysis.

And at least historically, equity ownership of great businesses through their publicly-traded stock has been an effective strategy for investors like us to fight inflation.

This article was written for financial advisory clients of Asset Strategies. If you’re not yet a client and you’d like to connect with an advisor and see how they may be able to help you work towards your goals, request a Welcome Call here.