Inflation-Adjusted (Real) S&P 500 Returns
Direct answer: After adjusting for inflation, the S&P 500's real annualized return has been approximately 7.0-7.5% since 1928. The 2000s “lost decade” was even more devastating in real terms: a -24% nominal loss became approximately -35% in real terms after accounting for 28% cumulative inflation over the decade.
S&P 500 nominal vs. real annual return (selected years)
| Year | Nominal S&P 500 TR | CPI Inflation | Real Return (approx) |
|---|---|---|---|
| 1980 | +32.4% | 12.5% | +17.7% |
| 1990 | -3.1% | 6.1% | -8.7% |
| 2000 | -9.1% | 3.4% | -12.1% |
| 2005 | +4.9% | 3.4% | +1.5% |
| 2008 | -37.0% | 0.1% | -37.1% |
| 2009 | +26.5% | 2.7% | +23.1% |
| 2013 | +32.4% | 1.5% | +30.4% |
| 2021 | +28.7% | 7.0% | +19.6% |
| 2022 | -18.1% | 6.5% | -23.1% |
| 2023 | +26.3% | 3.4% | +22.2% |
| 2024 | +25.0% | 2.9% | +21.5% |
Source: Robert Shiller: Online Data on Stock Market. Last verified: September 2026.
Frequently asked questions
What is the historical real return of the S&P 500?
The S&P 500's annualized real total return (after inflation) has been approximately 7.0% since 1928, compared to a nominal return of approximately 10%. The 3% difference reflects long-run average inflation. Real returns are what actually matter for wealth building: they determine how much your purchasing power increases. Over 30 years, a 7% real return compounds $100,000 to approximately $761,000 in today's dollars; a 10% nominal return on the same amount grows to $1,745,000, but some portion of that represents inflation.
How did 1970s inflation affect real stock returns?
The 1970s saw high inflation (averaging 7.4% per year) combined with poor nominal stock returns (S&P 500 averaged approximately +5.9% per year including dividends during the decade). The result was negative or near-zero real returns for most of the decade. The period 1966-1982 is often called the real secular bear market even though nominal returns were slightly positive, because inflation eroded all purchasing power gains. This era is why financial planners always emphasize real (inflation-adjusted) returns rather than nominal figures.
What is the Shiller CAPE ratio and what does it predict?
The Cyclically Adjusted Price-to-Earnings (CAPE) ratio, developed by economist Robert Shiller, divides the S&P 500 price by the 10-year average real earnings. It smooths out short-term earnings fluctuations. High CAPE ratios (above 25-30) have historically been followed by below-average returns over the next decade. The CAPE exceeded 30 in late 1999 (dot-com peak), reached 44 in December 1999, and stood at approximately 35-38 in 2024. Historical relationships suggest lower-than-average real returns over the next decade from elevated starting valuations.