Stocks and Social Security in the United Sates - A Detailed, Substantive Analysis by Copernicus

STOCKS and SOCIAL SECURITY

Table 3_2005.

Final Wealth Indices, Annual Returns, and Related CPI
All 40-year Periods 1871-2005
Ending Value of $1 Contributed Annually

Period	Wealth Index		Cum	Real Wealth		Annual % Return *
Ending	Stocks	Bonds	CPI	Stocks	Bonds	Stocks	Bonds	CPI
1911	203	86	49	154	36	6.8	3.0	1.1
1912	207	85	51	157	34	7.0	3.0	1.1
1913	178	84	52	126	32	5.2	3.0	1.2
1914	161	83	52	109	31	4.4	3.0	1.2
1915	206	83	53	153	30	7.7	3.1	1.3
1916	211	82	59	153	23	7.5	3.0	1.5
1917	146	81	69	78	12	3.4	3.0	1.9
1918	169	76	82	88	-6	5.9	2.3	2.4
1919	187	74	92	95	-18	7.2	2.2	2.6
1920	143	75	93	50	-17	3.9	2.6	2.6
1921	157	82	81	75	1	5.3	3.6	2.2
1922	190	82	78	112	4	7.5	3.5	2.2
1923	186	84	79	107	5	6.7	3.6	2.3
1924	223	87	78	145	9	8.6	3.8	2.4
1925	269	89	79	190	10	10.4	4.0	2.5
1926	289	91	77	212	15	10.3	4.1	2.5
1927	372	92	73	299	19	12.7	4.1	2.4
1928	509	89	71	438	18	15.5	3.6	2.3
1929	437	91	70	366	21	11.9	3.9	2.4
1930	307	92	65	243	27	7.5	3.9	2.2
1931	161	89	58	103	32	1.5	3.5	2.0
1932	139	91	51	88	40	1.2	3.7	1.8
1933	201	93	50	151	43	6.3	3.9	1.8
1934	182	95	50	132	45	4.9	4.1	1.9
1935	246	95	51	195	44	8.9	4.0	2.0
1936	299	94	51	248	43	10.7	3.7	2.0
1937	175	94	51	124	43	4.1	3.8	2.1
1938	213	96	49	164	47	7.2	3.9	2.0
1939	194	94	48	146	46	6.0	3.7	1.9
1940	162	95	47	114	48	4.2	3.8	1.9
1941	133	94	51	82	43	2.7	3.5	2.0
1942	152	92	55	98	38	4.8	3.4	2.2
1943	181	91	55	126	36	6.8	3.3	2.2
1944	201	90	55	146	35	7.8	3.2	2.2
1945	258	92	55	203	37	10.4	3.4	2.2
1946	224	89	63	160	26	7.6	3.1	2.5
1947	223	85	67	156	18	7.4	2.7	2.7
1948	216	84	68	148	17	7.1	2.7	2.7
1949	240	85	64	175	21	8.3	2.9	2.5
1950	296	81	67	229	15	10.4	2.5	2.7
1951	345	78	69	276	10	11.4	2.3	2.8
1952	384	78	67	316	10	11.8	2.3	2.7
1953	357	77	66	291	11	10.1	2.3	2.7
1954	505	76	64	441	12	14.3	2.4	2.6
1955	612	73	63	549	11	15.5	2.0	2.6
1956	612	70	63	549	7	14.1	1.7	2.4
1957	513	72	63	450	8	11.1	2.2	2.1
1958	671	68	64	608	5	14.6	1.8	1.8
1959	692	65	64	628	0	14.0	1.4	1.6
1960	645	69	65	581	4	12.4	2.4	1.5
1961	740	68	64	676	4	14.0	2.3	1.7
1962	613	70	64	548	5	11.3	2.6	1.8
1963	692	68	65	627	4	12.7	2.4	1.8
1964	737	69	65	672	4	13.1	2.5	1.8
1965	767	67	65	702	2	13.0	2.3	1.8
1966	647	69	67	581	2	10.4	2.5	1.9
1967	757	65	68	689	-3	12.2	2.0	2.0
1968	803	64	70	733	-5	12.1	2.0	2.1
1969	712	60	73	639	-13	9.8	1.2	2.2
1970	713	69	76	638	-7	9.6	3.0	2.5
1971	774	74	77	698	-2	10.3	3.7	2.8
1972	833	74	77	755	-3	11.3	3.4	3.2
1973	627	74	82	545	-7	8.1	3.3	3.5
1974	421	75	89	332	-14	4.4	3.3	3.9
1975	523	77	92	431	-15	8.0	3.5	4.0
1976	601	87	93	508	-6	9.5	4.6	4.2
1977	524	85	96	428	-11	7.3	4.0	4.3
1978	505	82	101	404	-19	7.4	3.4	4.8
1979	550	80	110	440	-30	8.6	3.2	5.5
1980	665	78	119	546	-41	10.9	2.8	6.1
1981	562	78	124	438	-46	8.7	2.9	6.1
1982	587	109	124	464	-14	10.0	6.8	5.8
1983	622	108	123	499	-15	11.1	5.7	5.8
1984	578	122	123	455	-1	10.3	6.6	5.9
1985	671	154	123	548	31	12.4	8.8	6.0
1986	717	183	119	597	64	12.7	9.8	5.1
1987	663	171	121	542	51	11.6	8.0	4.9
1988	671	176	122	549	54	12.1	7.8	5.0
1989	756	203	124	633	79	14.0	9.0	5.3
1990	627	210	127	501	83	11.7	8.6	5.4
1991	714	239	126	588	113	13.7	9.6	5.2
1992	677	250	126	551	124	12.7	9.3	5.3
1993	660	272	125	535	147	12.4	9.7	5.4
1994	581	242	124	457	118	11.2	7.7	5.6
1995	722	290	122	600	168	14.0	9.6	5.7
1996	814	281	122	692	160	14.7	8.6	5.7
1997	994	297	119	875	178	16.4	8.9	5.7
1998	1142	321	116	1026	204	17.3	9.4	5.7
1999	1272	283	115	1157	168	17.4	7.4	5.7
2000	1066	325	114	952	211	14.1	9.1	3.7
2001	861	322	111	750	211	11.4	8.4	3.7
2002	623	359	109	514	250	8.0	9.4	3.7
2003	734	346	106	628	240	10.6	8.4	3.4
2004	752	356	104	648	252	10.7	8.5	3.3
2005	734	363	102	632	260	10.2	8.4	3.2

					Avg	9.8	4.4	3.1
					StDev	3.6	2.5	1.5

* Annual % Returns are the summation of the averages of each year's component returns in current dollars divided by 40. Note the anomaly in 1931, 1932 and 1941 when stock returns appear lower than those of bonds. This is due to relative differences in the magnitudes of the components of the Wealth Index series vs the Annual % Return series. The extra effort to create a custom internal-rate-of-return algorithm is not necessary to do here. For actuarial purposes, a four-year smoothing eliminates the discrepancy if one desires. But it is not needed. The Final Wealth Index governs.

To calculate the real advantage of stocks for the average retiree, divide column 5 by the absolute value in column 6 for each year. The result is the multiple each retirement year by which the final wealth credited to each retiree's account in stocks exceeds bonds in purchasing power. The average multiple is 56.5 times for stocks over bonds over the 135-year period.

Sources. Global Financial Data, Inc. and Stocks, Bonds, Bills, And Inflation Yearbook, 2006: CLASSIC EDITION supplied the raw data upon which the calculations in the table are based.

Original article which this table supports