A Dollar in 1970 Buys 13 Cents Today
The silent destruction of purchasing power
CPI data shows that a dollar in 1970 has lost approximately 87% of its purchasing power by 2024. The average annual inflation rate over this period was approximately 3.9%. This silent erosion is invisible year-to-year but devastating over decades.
What history says
Editorial commentary written by ALAN analysts. Figures cited below are analyst-authored context — they are not derived from the chart above and may reflect different windows or sources.
At 3% inflation, purchasing power halves every 24 years. A retiree at 65 who lives to 90 will see their purchasing power cut in half during retirement if not protected.
Equities are real assets — they represent ownership of businesses that raise prices with inflation. Cash and fixed-rate bonds are nominal assets that are eroded by inflation.
Clients often plan in nominal terms ('I need $100K/year'). They need to plan in real terms ('I need $100K in today's dollars, which means $180K in 20 years at 3% inflation').
State your retirement plan in today's dollars and inflate every future need explicitly — a plan promising a fixed nominal income is quietly promising a shrinking one, and this arithmetic is why long-horizon portfolios need assets with pricing power rather than cash.