Risky business? Evaluating market risk of equity investment proposals to reform social security
AbstractA number of options have been proposed to address the expected financing shortfall of Social Security in the next century. Most basic aspects of the various reform proposals are captured by the three options offered by the Advisory Council on Social Security in 1996. Common to all three options is that they would permit either public or private equity investment. This article discusses the economic risks involved in public and private equity investments as a funding solution for Social Security. To quantify the risks involved in equity investment, stochastic simulations are based on the economic assumptions of the 1998 Trustees Report of Old Age and Survivors Insurance and Disability Insurance in combination with different assumptions about the rates of return on bonds and stocks. For public equity investment, financial market risk remains significant for at least 40 years. For individual accounts, I find that the chance of doing worse than with Social Security or of falling into poverty in retirement is generally high, yet varies with income level, gender, family status, and employment history. In general, women, married workers with dependent spouses, or workers with incomplete work histories fare worse than men, single workers, or workers with complete work histories when compared either to the current system or to the poverty line. © 2000 by the Association for Public Policy and Management.
Download InfoTo our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
Bibliographic InfoArticle provided by John Wiley & Sons, Ltd. in its journal Journal of Policy Analysis and Management.
Volume (Year): 19 (2000)
Issue (Month): 2 ()
Contact details of provider:
Web page: http://www3.interscience.wiley.com/journal/34787/home
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Milonas, Nikolaos /T & Papachristou, George & Roupas, Theodor /A, 2010. "Pension Funds under Investments Constraints: An Assessment of the Opportunity Cost to the Greek Social Security System," MPRA Paper 36702, University Library of Munich, Germany.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.