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A Critical Look at Equity Investment in the 1994-1996 Advisory Council on Social Security Recommendations

Three approaches to restoring Social Security's long-term solvency were offered in the recent recommendations of the 1994-1996 Advisory Council on Social Security: the Maintain Benefits Equity Investment (MBEI), Personal Security Accounts (PSA), and the Individual Accounts (IA) Plans. This 29-page issue brief describes and analyzes the impacts on individuals of the three approaches. It uses projections of stock market fluctuations to help evaluate the adequacy and equity of the three proposals. The paper observes that everyone's experience investing in equities in the IA or PSA plans (the two plans with individual investment components) will differ-some investors will receive low yields and some will receive high yields.