As the math above showed, the person receiving a 6% return (which is below the long-term average return of the S&P 500) over the course of a lifetime would have around twice their working income when they retire in perpetuity. The SS recipient would have only a fraction of working income. The second scenario you described could not happen; they would not be able to outlive that long-term income.
Trying to use the disability insurance program to cover for the flaws in the old age program in SS goes to show the weaknesses in the structure of the latter. They're not really a package deal. There's no reason you could not leave the disability insurance unchanged while allowing the old age program to generate market-average returns instead of no returns at all. As I said, it's a much better deal to American workers.
You seem to think my aim is just to blow everything up. Nah, not really. The goals the SS program was created to address -- old age income security and disability insurance -- are worthy ones. I'm just not convinced it is done in the most efficient way right now. "If you are going to do it, then do it right," and there is really no case what we're doing now is the best way. It's almost comical how conservative you want to be.
Crashing a market that bad would require something like a nuclear war. One of those classic "you've got bigger things to worry about" scenarios than your retirement accounts' savings at that point.
I still don't get you.
You do realize that nearly 60% of your IPERS is in the market, right?
Some subset of that is in private equity, too, which is even riskier than the S&P 500?
Why aren't you panicking? You keep ignoring this point.