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No. of Recommendations: 5
Good points VM. I think I'm covered:

The dividend stream from the common stocks is my biggest income source. That could be expected to increase in step with inflation. Not guaranteed, of course, but one would expect company revenues, expenses and profits to all accelerate in nominal terms. There would be winners and losers, and good years and bad, but across a diversified portfolio of common stocks, I would expect the income to keep pace with inflation over a span of years. Usually beating it, but some decades lagging it just a bit. This article takes a deep dive on that question: Over the 40 years ending the year 2000 inflation was over 500% but dividend growth was over 800%. Dividend growth lagged inflation in the 1970s, but not disastrously so and it caught up later.

The stock prices too should rise with inflation, but that might take a decade or 3, if the 1970s are any guide. Not important - selling stocks to support consumption is not part of my plan (except within the insured funds where the withdrawal rate is fixed by contract and only total return matters for whether the withdrawals come out of my holdings or out of the insurance company's hide). If the total return inside the insured funds beats my withdrawal rates (4 - 5% of the peak value on most of them), then my insured withdrawal amounts increase. If not, it stays the same. Cannot decline as long as I do not exceed the contractual withdrawal schedule. (Simplification, but approximately true).

The GNMA income stream would also rise to beat inflation. The long bond fund's income too, but to a lesser extent. Remember -- selling securities is not part of my plan, so I am only talking about the income stream, not the share prices. The income stream from a bond fund will rise with inflation as maturing bonds are replaced with ones bought at higher rates.

Then there's my deferred annuity, which though not inflation protected, is a big after-burner that kicks in in the far future (15 years out), replacing what inflation has done to the buying power of my preferred stocks. (Maybe more than, maybe less than, but it can only help).

Actually some of my insured mutual funds also have a delayed start to the guaranteed withdrawals, at a much higher (10%) withdrawal rate -- they start in 2022. Again, not inflation adjusted in themselves, but having income streams with delayed starts gives the aggregate family income an upward sloped over time in nominal terms, which is what you need to offset inflation.

We don't spend all the income, so the excess income reinvested is always increasing the income stream and that would accelerate in a high-inflation environment as dividend yields and bond yields of the securities bought with the excess income increased.

Then last, but foremost because of its safety and direct linkage to a price index, we will delay social security for both of us until age 70, to maximize that income stream that has a built-in inflation adjuster. Mine starts this year. Hers in 7 years. So hers is another delayed-start future income stream, on top of being inflation-adjusting.

Oh yeah, is still going strong. No plan for when or if I drop that. I sold half in 2012, taking in a partner to do half the work, but the remaining half is significant. The profits of that business could be expected to keep pace with inflation -- as long as I can (and want to) keep pace with the work!
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