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But Aren't Stocks a Better Investment Than Social Security?

Considering that Social Security isn’t meant to be an investment program at all, it still holds its own when compared with private accounts.

Considering that Social Security isn’t meant to be an investment program at all, it still holds its own when compared with private accounts. If you look at the standard period for long-range retirement savings, 20 to 35 years, you see a lot of volatility in the stock market. In the 20-year period ending in 1982, for example, the overall rate of return was actually negative.

While the average rate of return over the last 70 years has been 7 percent, that doesn’t mean investors can expect the same rates in the future. In fact, the identical economic assumptions used by the Social Security Trustees in determining Social Security’s eventual deficit would put the future real rate of return for stocks at about 4.36 percent. Ultimately, of course, the real rate of return for anyone is based on personal investment choices. Some people will make out like bandits and others will see below-average results. 

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