Social Security and Market Risk
Introduction
There have been a number of proposals to invest the Social Security surplus in the financial markets. Some call for the government to do the investing. Others would have workers deposit part of their payroll tax payments in individual accounts that would be invested in assets, such as stocks and bonds. Are such investments inherently risky?
"How risky is the stock market?"
This paper analyzes market risks, using data from 1872 to 2000.1 To allow a comparison with Social Security, which bases retirement benefits on the 35 years of highest earnings, we examine market performance over ninety-five 35-year periods during those years.