Social Security gives the same return as the Market

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opebo:
Here's an interesting article about Social Security - turns out it gives a slightly better return on investment than private stocks would! 

http://www.csmonitor.com/2004/1227/p01s03-cogn.html

No surprise there - much of what has become 'common knowledge' about Social Security is just a lot of fabrication by the GOP and the right-wing press.  Kind of like the demonization of welfare a few years back.  Any of you who are in school, better get ready for the student loan/aid programs to get the same treatment soon.

AuH2O:
"Advocates of privatization point out - correctly - that Logue's analysis compares theoretical stock returns with what the Social Security Trust Fund earned - not what he himself would get from the system."

That, my friends, is the problem.

No, I do not expect opebo to understand even basic, 3rd grade concepts, but this one is particularly obvious.

David S:
Thatís a rigged analysis. First of all it only compares the return on treasury bills vs the return on the Dow Jones averages. The time span used is one in which the stock market returns were reasonable but not great. Had they continued the analysis for a few more years the stocks would have won handily. In this analysis the return on money invested in treasury bills is alleged to be $261,372 in 1994 versus $255,499 if invested in stocks which mirror the performance of the Dow. But during the next 5 years the Dow went from about 4000 to over 10,000. So the $255,499 if allowed to sit in the stock market until 1999 would have grown to $638,747. And that does not include dividends.

Also the money invested in the stock market would actually be there. Money spent on social security is not there. Most of the money you pay into social security today is spent on current retirees. Any excess goes to the trust fund, but even that amount doesnít stay there long. Congress also spends that money and replaces it with an IOU, the Treasury bill. That Treasury bill must be paid by the taxpayers when it is needed to meet social securityís expenditures. That will happen in a few years when the baby boomers start retiring.

BTW the article you cited comes from The Christian Science Monitor, an unusual source for an Opebo quote. Have you mended your ways? :)

The Duke:
An S&P index fund gives an average since 1980 gives about a 10% annual rate of return.  The only way you can lose money in the market relative to the 4% rate of return on social security, as Mr. Logue did, is if you're stupid.  Yes, the Bush plan discriminates agains the incompetent.

David S:
Okay I just did the calculations. I've been paying into social security since 1972. If that money had been invested in a mutual fund that mirrors the NASDAQ the total today would be $456,987. When you include my employer's contribution the total comes to $913,000.  So much for social security as a great investment.

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