Does cash keep up with inflation over the long run?

How much buying power cash has lost since 1947

Since 1947, consumer prices have risen more than fifteen-fold. What $1 bought in 1947 costs $15.53 now.

Inflation has averaged about 3.5% a year over these eight decades. That sounds modest, but at that pace prices double roughly every 20 years. A retirement that lasts 25 or 30 years will watch the cost of living double at least once.

Cash feels safe because the number on the statement never falls. Inflation lowers what that number buys.

A dollar kept in cash since 1947 held onto about six cents of its buying power. Money meant for the long term has to grow faster than inflation to keep its buying power.

What has outpaced inflation

Growth of $1 from January 1947 through June 2026, with the annualized rate over the period:

• Consumer prices (CPI): $15.53, about 3.5% a year
• Treasury bills: $20.79, about 3.9% a year
• Broad U.S. stocks, dividends reinvested: $5,864, about 11.5% a year

What it took to earn the stock return

Treasury bills, the classic safe asset, finished barely ahead of the $15.53 needed just to break even with prices.

Broad U.S. stocks grew the same dollar into $5,864. That reward came only to investors who stayed through every downturn along the way, including some that cut the market roughly in half.

How this shapes a portfolio

For a long-term plan, inflation works as a slow leak. We size the stock side of a portfolio to the years the money must outrun prices, and the safe side to the years it must be there when needed.

About these numbers

The growth-of-$1 figures are hypothetical illustrations computed from monthly data, January 1947 through June 2026. U.S. stocks are the CRSP total U.S. market return and Treasury bills are the one-month T-bill return, both from the Ken French Data Library. Consumer prices are the CPI-U from the U.S. Bureau of Labor Statistics.

The figures assume reinvestment of all income and reflect no fees, taxes, or trading costs. An index can't be purchased directly, and past performance doesn't guarantee future results.