The Rabi model considers a two-level system (or spin 1/2) coupled to a quantized harmonic oscillator and describes the simplest interaction between matter and light. The recent experimental progress in solid-state circuit quantum electrodynamics has engendered theoretical efforts to quantitatively describe the mathematical and physical aspects of the light-matter interaction beyond the rotating-wave approximation. We develop a stochastic Schrödinger equation approach which enables us to access the strong-coupling limit of the Rabi model and study the effects of dissipation and ac drive in an exact manner. We include the effect of Ohmic noise on the non-Markovian spin dynamics, resulting in Kondo-type correlations, as well as cavity losses. We compute the time evolution of spin variables in various conditions. As a consideration for future work, we discuss the possibility of reaching a steady state with one polariton in realistic experimental conditions.