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Investing Specialists

Should You Count Social Security as a Bond?

The right answer depends a lot on the retiree's risk capacity as well as risk preferences.

For many people approaching and entering their retirement years, Social Security benefits are the most valuable "asset" they have. According to statistics compiled by the Urban Institute, a two-earner couple earning average wages over their lifetimes and starting Social Security at 65 in 2010 would receive nearly $1 million in Social Security benefits over their lifetimes.

The specific dollar value of benefits received will depend on each individual's earnings history, marital status, and longevity, among other factors. But that amount still looms large over the investment assets that many retirees bring into retirement. At the end of the third quarter of 2013, the average Fidelity 401(k) investor age 55 or over who had been contributing to a 401(k) for 10 years or more had about $270,000 in his or her account. Meanwhile, the average IRA balance for Fidelity investors between the ages of 50 and 59 was about $76,000 as of the end of 2012. The stock market has certainly helped boost many account values in recent years, but for many pre-retirees, those accounts are no match for the lifetime value of their Social Security benefits.