Simple. You don’t invest in any stocks.
And the money is invested at absolutely dismal rates of return. If this were a private fund, there would be lawsuits and probably more. In 1974, he adds, Congress passed the Employee Retirement Income Security Act, or Erisa, which allowed pension funds to diversify into stocks and other riskier assets. Unfortunately, he says, Congress didn’t change the rules for Social Security.
Stock returns are more volatile from year to year, to be sure. But over time they have outpaced bonds by an enormous margin. Since the 1920s, stocks have beaten U.S. Treasury bonds by an average of about 4.7 percentage points a year, according to New York University’s Stern School of Business.
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