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Social Security and the Stock Market

How the Pursuit of Market Magic Shapes the System

Alicia H. Munnell and Steven A. Sass

Publication Year: 2006

"Optimal social security design needs to look at the tradeoff between risk and return of retirement benefits. Munnell and Sass provide an excellent and lucid exposition of the issues which arise when seeking higher returns through riskier benefit designs. This is the book to turn to in order to review international experience so as to understand the pluses and minuses of equities." –J. Michael Orszag, Head of Research, Watson Wyatt LLP

Published by: W.E. Upjohn Institute


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Title Page, Copyright

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Table of Contents

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p. ix

This book could not have seen the light of day were it not for the help of our friends. Marric Buessing, Luke Delorme, Joel Lieginger, and Kevin Meme, all at the Center for Retirement Research at Boston College, provided excellent research assistance. Andrew Eschtruth and Francis Vitagliano, also...

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1. Introduction

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pp. 1-20

The retirement of the baby boomers will initiate a dramatic aging of the U.S. population. The baby boom, the large generation born between 1946 and 1964, is currently of working age. But the entire generation turns 65, the traditional work-retirement divide, between 2010...

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2. The Creation of Modern Retirement Income Systems

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pp. 21-42

The elderly in modern industrial economies get the bulk of their income from two main sources—government old-age pensions and government subsidized and regulated employer-based plans. This is strikingly new. Prior to 1900, retirement itself was rare. Only as the...

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3. The Retirement Income Challenge Facing the United States

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pp. 43-67

The U.S. retirement income system, like the systems in other industrial nations, faces major demographic and economic challenges going forward. As discussed in the introduction, population aging over the next quarter century will raise the cost of promised Social Security...

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4. Lessons from the United Kingdom: Privatization and a Safety Net

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pp. 69-90

The United Kingdom has included equity investment in its Social Security program along the lines of the “carve-out” individual account approach. The goal of the reform was to restore solvency, reduce dependence on the state, and increase reliance on individual initiative and...

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5. Lessons from Australia: Mandating “Add-On” Individual Accounts

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pp. 91-106

Australia introduced equity investments into its Social Security program along the lines of the “add-on” individual retirement account approach. The analogy is not perfect. The mandatory contributions to Australia’s individual accounts, which were introduced in the 1990s...

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6. Lessons from Canada: Investing the Trust Fund in Equities

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pp. 107-126

Canada introduced equity investments into its Social Security program by using the “trust fund investment” approach; it was the first of the four Anglo-Saxon nations under review to expand its retirement income system. The legislation was enacted by the end of the 1960s...

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7. Conclusions

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pp. 127-143

The U.S. retirement income system faces an enormous challenge, with the transition to a much older society about to begin. The now dominant 401(k) plans have not produced the accumulations that people will need for a secure retirement, and the backbone of the retirement...


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pp. 145-156

About the Authors

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p. 157


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pp. 159-169

About the Institute

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p. 171

E-ISBN-13: 9780880994507
E-ISBN-10: 0880994509
Print-ISBN-13: 9780880992909
Print-ISBN-10: 0880992905

Page Count: 171
Publication Year: 2006

Edition: First

OCLC Number: 228143735
MUSE Marc Record: Download for Social Security and the Stock Market

Research Areas


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Subject Headings

  • Social security -- United States -- Finance.
  • Pension trusts -- Investments -- United States.
  • Stock exchanges -- United States.
  • Social security -- Cross-cultural studies.
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