Obama Questioned on Economy at Backyard Gathering

I want to respond to this paragraph:

He said Social Security is supposed to be a “rock solid” and secure floor for people to tap when they have retired. He dismissed the notion of privatizing Social Security, saying, “Imagine if Social Security, if a portion of that, had been in the stock market back in 2006 and 2007?”

Okay, let’s say it had. Let’s further stipulate it had been privatized in 1982, and an employee retired in 2007 at the age of 65, was 40 years of age in 1982.  That employee made regular contributions to the program, reinvested the dividends, and invested in the “market”, as defined by the S&P 500.

In that 25 year period, the market returned 9.68% per year on average.  Some years the market went up more, some years it went down more.  This period includes the tech-bubble of 2000.  A dollar invested in 1982 would be worth $11 now.  That $11 is adjusted for inflation, meaning the value was not eaten up by inflation.  See this calculator.

O article here.


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