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Originally Posted by Happy Monkey
Instead, we'll let 'em move some of their social security, currrently in treasury bonds, into the stock market, and tell them not to retire in a down year.
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The social security fund is heavily invested in T-Bills and returns a paltry 2-3% annually. The stock market returns, on average, 11-12% per year (which includes down years, btw).
So, here is a chart of the two alternatives: A person who has $10,000 in his or her SS acct at age 30. Look what happens to that 10k (with NO additional money contributed) by the time the person is 65. Even if the stock market took a plunge in any of the last ten years the stock market option still kicks the living crap out of the paltry T-Bill return that SS gets.
I will say, however, that the stock option is only good for people with at least 20 years ahead of them. That is more than long enough to substantially increase the odds of actually achieving a return close to the historical average.