As major stock market indices plummeted over the past several months, opponents of voluntary Social Security personal accounts have grown visibly gleeful, hoping that public enthusiasm for personal accounts will follow the markets downward. If we had implemented accounts a few years ago, they warn, tens of billions of dollars would have been lost. The truth, however, is that the recent bear market shows how strong the idea of personal accounts is. While skeptics gloat about the plunging Dow Jones index, personal accounts pass the test of a bear market with flying colors.

Social Security’s current “pay-as-you-go” financing will inevitably require reform as teems of baby boomers retire and the number of workers remaining to support them shrinks. One element of many reform proposals is personal retirement accounts, which would give workers the option to invest a portion of their payroll taxes in stock and bond mutual funds. Those funds, which earn much higher returns than the current program, could help make balancing Social Security’s books less painful. President Bush made personal accounts a centerpiece of his presidential campaign, but reform opponents now see the idea turning around to bite him.

Yet even in a market environment seemingly tailor-made for opponents of reform, personal accounts would pay substantially higher retirement benefits than the current Social Security program while giving workers ownership and control over their savings.

Stock returns have averaged 7 percent after inflation throughout American history. Even after the recent market drop, a worker retiring today and holding only stocks in his account would have received about 6‑percent annual returns, far above the 2.5‑percent return an average couple can expect from Social Security (even after including all survivors and disability benefits). Higher rates of return, compounded over decades, could double or even triple a worker’s retirement nest egg and make addressing Social Security’s financing problems easier.

However bad the market’s recent performance, a worker retiring today would have begun investing in the late 1950s when the Dow was one-tenth its current value. Over 20-year periods, the stock market has never once lost money. And even a worker retiring in the Great Depression would have received a 4‑percent average return. Over the long term, stocks have been less risky investments than supposedly “safe” government bonds.

Even so, most workers diversify as they age, so their retirement future would not be completely dependent on stock performance. Diversification limited most investment losses from 5 to 10 percent last year, even as most stock indices plummeted. According to a 2000 study, a typical worker in his 60s has only 40 percent of his 401(k) account in stocks. Such a worker would have lost 3.25 percent last year because bond prices rose while stocks fell. Lower income workers held even less stock, and would actually have made money in the past year. That’s the power of diversification.

As important, personal accounts would be voluntary. No worker would be forced to take an account, and no worker with an account would be forced to invest a penny in the stock market. Under plans from President Bush’s reform commission, all workers over age 55 would remain in the current system and receive every penny they’re promised. Current and near-retirees have nothing to fear from reform, while younger workers would finally have a choice.

Choice, control, and ownership are what keep Americans supporting personal accounts even when the politicians and pundits get the jitters. A Zogby International poll conducted for the Cato Institute July 8–12 — a period when the Dow Jones Industrials Index fell almost 700 points — shows 68 percent of likely voters supporting voluntary personal accounts. That’s up from 54 percent in mid-1999, when the Dow was near its peak.

Despite the market, 55 percent of working-age voters think personal accounts are less risky than the current system, which will not remain solvent unless Congress adopts substantial tax increases or benefit reductions. By a two-to-one margin, likely voters think the lesson of the Enron scandal is that workers need more control over their retirement savings, including personal accounts for Social Security, not that markets are dangerous and that accounts shouldn’t be allowed. Individual control is a recurring theme.

An idea shows its strength when times seem the toughest. For a proposal to let workers invest part of their Social Security taxes in the stock market, these would seem to be tough times. But even today, personal accounts would increase Americans’ retirement income. And even today, Americans support them. That’s why today’s stock market doesn’t contradict the case for personal accounts. It confirms it.