As things stand today, the government spends 100 percent of the Social Security funds it receives and promises to pay all future Social Security payments out of future tax collections. Today, there is nothing there to pay future social security payments. Nada. Zilch.
If Social Security funds had been invested in the stock market, the fund would have temporarily lost value. However, the fund would have been making significant gains in the previous years, cushioning this loss. Today, the fund would contain a very large portfolio of stocks that could be used to fund future Social Security payments. Furthermore, this market drop would be a great buying opportunity for the Social Security fund, which would profit handsomely when the market comes back.
The stock market would have to drop 100 percent and never come back before the stock market funding model would be as bad as the current Social Security funding model.