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Larry Kudlow on Social Security
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Market's higher return trounces Social Security's low yield
Kudlow places the blame for Social Security's doomsday forecasts on the anemic growth rate of its asset reserves. Said Kudlow in a 2007 article in National Review: "The real problem with Social Security is not bankruptcy. It's the dreadful investment
return (barely 1 percent) that future retirees have to look forward to. If Americans had the chance to purchase S&P 500 SPDR contracts, and were able to hold them for fifty years, they would receive a real return of at least 7 percent compounded
annually based on the history of the stock market. That's a lot of Benjamins."In plainer English, Kudlow backs the idea of partially or fully privatizing Social Security to allow working Americans control over a portion of their retirement benefit.
To be fair, the average rate of return on Social Security's asset reserves˙is a much healthier 2.9% today. But if working Americans could invest in the stock market over the long term, they would have an opportunity to best this 2.9% return.
Source: Sean Williams in Motley Fool blog, on Trump Cabinet
, Jul 19, 2018
Page last updated: Apr 30, 2021