The average retirement age in the United States is 62.

I just turned 62.

Everyone turning 62 in 2023 was born in 1961, and history reminds us how impactful that year in history was – President Kennedy was inaugurated, the Beatles started playing lunch sets at The Cavern, Yuri Gagarin became the first human in space, Roger Maris hit 61 home runs, and the Berlin Wall went up.

I’m not quite ready to “retire,” but this number got me thinking….

I’m in the business of guiding hard working people, hoping for a three-decade retirement, to the best possible outcome. In 40 years of providing advice, it’s often the simplest concepts that help drive home how to get that done.

With 62 years of life under my belt, I keep coming back to three basic questions and answers:

Where did the S&P 500 end the year just past, relative to where it was in 1961?

How much did that index pay in dividends last year versus 1961?

How did both the price performance and the trend of dividend payments stack up in relation to inflation, which really is all that matters?

The answers:

• The S&P 500 closed out 1961 at 72. It ended 2022 at 3,839.
• The cash dividend in 1961 was $2.04. It was nearly $67 this past year.
• The Consumer Price Index (CPI) ended 1961 at 30. It closed out 2022 at 297.

The scoreboard, in round numbers:

• S&P 500 up by a magnitude of 53 times
• Dividend up by a magnitude of 32 times
• CPI up by a magnitude of 10 times

It can be easy to get caught up in all of the “noise” masquerading as investment opportunity today – cryptocurrency, NFTs, and private placements – but let the 62 Year Scoreboard remind us of one thing.

Regardless of what year you were born, or how old you are, focus on how 500 large public companies based in our country have been the simplest and most effortless way of building “real” (net of inflation) wealth. Perhaps most important of all, owning these companies also produced cash flow that increased your purchasing power over time at a far greater rate than inflation took it away.

Simple investments with clear cash flow and solid track records work best for long term capital appreciation.

If we’ve said anything you wish to discuss, please reach out.

Learn something? Please feel free to share this newsletter with a friend.

Sources

Federal Reserve Bank of Minneapolis. Retrieved on February 27th, 2023 from https://www.minneapolisfed.org/about-us/monetary-policy/inflation-calculator/consumer-price-index-1913-#

Macrotrends. S&P 500 Index – 90 Year Historical Chart. Retrieved on February 27th, 2023 from https://www.macrotrends.net/2324/sp-500-historical-chart-data

NYU Stern. Damodaran Online. Retrieved on February 27th, 2023 from https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/spearn.htm

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