Financial Planning Fridays #147: Why Your Portfolio Must Keep Growing in Retirement
Retirement can last three decades or longer, and inflation raises the cost of everything from postage stamps to groceries and health care along the way. This Presilium video shows how the purchasing power of $10 has fallen since 1983, while $10 invested in stocks over the same period grew substantially, and explains why a retirement portfolio needs to keep growing rather than stand still.
Retirement can last three decades or longer, and inflation raises the cost of everything from postage stamps to groceries and health care along the way. This Presilium video shows how the purchasing power of $10 has fallen since 1983, while $10 invested in stocks over the same period grew substantially, and explains why a retirement portfolio needs to keep growing rather than stand still.
Key takeaways
- Retirement can last 30 years or more, and inflation steadily raises the cost of everyday expenses like groceries, travel, and health care.
- A postage stamp that cost 32 cents 30 years ago costs 73 cents today, a simple illustration of how inflation erodes the value of savings over time.
- Since 1983, the purchasing power of $10 has fallen to about $3.12 today, while $10 invested in stocks over the same period grew to almost $900, though past performance does not guarantee future results.
- Presilium builds portfolios designed to keep growing throughout retirement so clients can stay ahead of inflation and maintain their lifestyle.
Hi friends, today I want to talk with you about why your portfolio must keep growing throughout your lifetime and especially your retirement. There is a very good chance that at least you, your spouse, or both of you are going to be retired for 30 plus years. During that time, the price of everything is going to increase dramatically.
Do you know how much a postage stamp was 30 years ago? 32 cents. Today, that same stamp is 73 cents, more than twice as expensive. Now, it's easy to laugh off just a few cents, but this is exactly how inflation works. It steadily reduces the value of the wealth we have earned and saved over time. And it doesn't just affect stamps. It affects your groceries, travel, health care, property taxes, everything you'll spend money on in retirement.
This great chart shows the purchasing power of $10 since July 1983. As you can see, $10 spent in 1983 would only purchase $3.12 of goods and services today. Almost 70% of the value of your wealth has been reduced by inflation since then. This is why your retirement portfolio can't just sit still. Even after you stop working, your investments need to keep growing because the cost of living keeps rising.
Now, this is a chart showing $10 invested in stock since July 1983. It would have grown to almost $900. Not only would this more than outpace inflation, but you could now buy about 30 times as many goods and services with your wealth, even at their new inflated prices. If your money isn't growing, it's shrinking. Not all at once, but little by little, year after year, just like that stamp.
At Presilium, we build portfolios designed to grow with you throughout your lifetime to help you stay ahead of inflation, maintain your lifestyle, and feel confident in your financial future. So, the next time you see the price of a stamp go up, or anything else for that matter in your life, don't get frustrated. Just remember, your plan is built to rise with it. Thank you and I look forward to talking with you next Friday morning.
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