The Five Numbers You Need to Know for Uncertain Times

If you turn on financial news on any given day, there’s no shortage of reasons to be worried: war, tariffs, deficits, political wrangling, and election uncertainty. The headlines arrive faster than the last ones have been processed, and they are universally designed to alarm and capture your attention. The anxiety is understandable.

Predictions of the future about how a situation might play out are nothing but a best guess, which is not reassuring. What’s more important? Perspective. Specifically, five numbers that, taken together, tell a more complete and honest story about long-term investing than anything running across screens.

These numbers do not predict what will happen next week or next quarter. No one knows that. What they do is something more valuable: they describe what happened across every environment the modern economy has ever thrown at investors, wars, recessions, pandemics, political upheaval, and financial crises, and what that history means for your portfolio’s capacity to support your lifestyle and legacy. So, when the crises de jour generate blaring headlines, there is no need to “adjust the strategy” because we already assumed a headline-driven market pullback in our projections and structured the portfolio accordingly. We intend for your portfolio to handle such scenarios and, inevitably, recover.

To keep it straightforward, we focus on the S&P 500 as the primary investment vehicle to consider, but the same principles apply to a personally tailored and diversified portfolio.

This is the percentage of all rolling 5-year periods since 1926, in which the S&P 500 produced a positive return. (Source: Robert Shiller Online Data)

Consider this: Since 1926, through the Great Depression, World War II, the stagflation of the 1970s, the dot-com collapse, the 2008 financial crisis, a global pandemic, and everything in between, a patient investor who simply owned a diversified portfolio of American equities and held on for five years came out ahead nearly nine times out of ten. The remaining 11.2% of the time? Those periods cluster around the most historically severe market dislocations: the Depression era, the aftermath of the dot-com bubble, and the immediate post-2008 window, which are all extraordinary circumstances. Even in those cases, the portfolios that survived, the ones that didn't panic and sell at the bottom, recovered.

The lesson is not that markets always go up in the short run. They most certainly do not. The lesson is that the longer your time horizon, the more the odds shift decisively in your favor. Five years is not a long time. For most clients, retirement spans thirty years or more. Time and patience are the most powerful forces in the portfolio.

This is the cumulative increase in the Consumer Price Index, better known as inflation, since 1964. What cost $1.00 in 1964 costs approximately $10.00 today (technically $10.38) (Source: U.S. Bureau of Labor Statistics). This is no doubt the silent scourge to retirees’ lifestyle spending over multiple decades.

That is not a rounding error or a statistical artifact. That is the quiet, relentless, compounding reality of inflation across six decades. We raise this number not to alarm but to frame the true risk of retirement. Most people think of risk as losing money in a market decline. That risk is real, but it is almost always temporary and recoverable. The risk of inflation is invisible, gradual, and—if your portfolio is positioned incorrectly—permanent.

A retiree who places all their savings into "safe" cash and short-term bonds because they are frightened of market volatility is not eliminating risk. They are trading one risk for another. The risk they are avoiding is a temporary paper loss. The risk they are accepting is the permanent erosion of their purchasing power over thirty years. Ironically, the riskiest thing a long-term investor can do is refuse to take any “risk” at all.

This is why equities, despite their short-term discomforting volatility, are not optional for a retirement portfolio that needs to last decades. They are the only asset class with a long-term track record of outpacing inflation with any reliability. Number two leads directly to number three.

This is the cumulative increase in the S&P 500 since 1964. To end 1964, the S&P 500 closed at 84. The S&P 500 finished 2025 at 6,853 (Source: Robert Shiller Online Data). In the same sixty-year period that inflation increased tenfold, the S&P 500 increased approximately eightyfold. Not ten times. Eighty times. The stock market did not merely keep pace with inflation; it lapped it eight times over.

During those sixty years, investors endured multiple recessions, an oil embargo, double-digit interest rates, the savings and loan crisis, the dot-com collapse, the worst financial crisis since the Depression, a global pandemic that shut down the world economy, and the most rapid interest rate tightening cycle in modern history. The market fell sharply in each of those episodes. In each of those episodes, patient investors who did not sell were eventually rewarded.

This is not an argument that the next sixty years will look exactly like the last sixty. No one can promise that. It is an argument that the long-term direction of well-run American companies (in aggregate), compounding their earnings and returning capital to shareholders, has historically been up. There is no compelling alternative for a portfolio that needs to fund three decades of retirement spending.

This is the cumulative increase in cash dividends paid by S&P 500 companies since 1964. For 1964, the cash dividend of the S&P 500 was $2.58. In 2025, it was $78.51 (Source: NYU Stern data). This is the number that most surprises people, and it is the one we find most instructive about the nature of equity investing.

Dividends are not a market prediction. They are not sentiment or momentum or the sum of everyone's hopes and fears about next quarter's earnings. Dividends are real cash, generated by real businesses, paid to real shareholders from real profits. They are the most tangible evidence that the companies underlying the stock market are, in the aggregate, genuinely growing more productive and more profitable over time. When dividends rise thirtyfold over sixty years while inflation rises tenfold, we reach an important conclusion: the productive capacity of American business has dramatically outpaced the general rise in prices. That gap between what businesses earn and what things cost is where long-term investment returns come from. It is not magic. It is not a prediction. It is historical record.

For a retiree, this matters in a very practical way. A portfolio of dividend-paying equities held over time does not merely maintain purchasing power; it grows purchasing power. That is the difference between a retirement lifestyle that feels increasingly comfortable and one that feels increasingly constrained.

The number of years of net spending your portfolio holds in fixed income and cash.

The first four numbers are historical. This one is personal, and it is the most operationally important of them all.

The math is quite simple: how many years of net living expenses—after Social Security, pensions, and any other stable income—does your portfolio hold in high-quality fixed income and cash? If the equity markets declined 30% tomorrow and stayed down for three years, could your portfolio fund your lifestyle without selling a single share of stock?

If the answer is yes, you have something invaluable: time. Time for the market to recover. Time to avoid selling at the bottom. Time to let the 88.8% statistic work in your favor instead of against you.

This is why we build the foundation of client portfolios in high quality fixed income as some multiple of this net number, anywhere from three years to 10 years of net spending. Not because fixed income is exciting—it is not. Not because bonds will outperform equities over the long run—they will not. It is because having between three to 10 years of expenses anchored in stable, predictable, non-volatile assets is what allows a retiree to hold equities through the inevitable storms without making the permanent mistake of selling at the worst possible moment–turning a temporary decline into permanent capital losses.

Fixed income is not the growth engine. It is the shock absorber that keeps the growth engine running.

The greatest threat to a retirement portfolio is not a bear market. Bear markets are temporary. The greatest threat is the knee-jerk behavioral response to a bear market: the panic, the “this time is different” mentality, and the permanent lock-in of temporary losses that almost always follows. A properly structured portfolio, with enough stable assets to fund near-term spending without touching equities, is the most practical defense against that threat.

88.8%. 10x. 80x. 30x. And your Number.

The first four tell you what patient, disciplined investing has historically delivered across every kind of uncertainty the modern world has produced. The fifth tells you whether your portfolio is structured to let you be a patient, disciplined investor when uncertainty arrives—as it always does—and tempts you to be otherwise.

When the headlines are loud and the screens are red, we do not ask clients to ignore what they see. We ask them to remember these numbers. We know investors who came out ahead were almost never the ones who acted decisively in response to short-term fear. It’s investors who did not. That is not passive nor naive. That is the most sophisticated investment strategy available to a pre-retiree or retiree who wants to retire with confidence and stay retired with dignity.

These five numbers have been teaching immutable lessons for decades. Our job is to simply apply these lessons with confidence.