Social Security cannot afford to pay all of the benefits it has promised. Beginning in 2017, it will run cash deficits that get bigger every year.

Opponents of personal accounts in Social Security rarely speak about investing in the broad stock market without mentioning the supposed “risk” involved. Yet a simple analysis of stock returns over the past 80 years shows that in no 15-year period of holding stocks did they decline in value. In a more typical 25-year working lifetime of holding stocks, the worst average annual performance was 6%, beating out so-called “safe” Treasury bonds. Over time, the typical annual rate of return of stocks has been 10.6%. These time periods include the Great Depression, World War II, the stagflation 1970s, Black Monday, the Mexican Peso crisis, and 9/11. In the short-run, stocks have wildly-fluctuating returns. That’s why stocks must be considered long-term investments. When given enough time to smooth out the volatility, though, nothing beats stocks to build a nest egg for a safe and secure retirement.

The system has a problem, and we need to fix it. Personal accounts are the solution.

Over Time, Stocks Tend to Be Less Risky, Have More Stable Returns
Source: Stocks, Bonds, Bills and Inflation 2004 Yearbook
Annual Returns of S&P 500 Stocks, 1926-2003