Industry News

On July 5, 2023, the Center for Retirement Research at Boston College (CRR) released its issue brief, Should Social Security Invest in Equities? The brief examined the concept of the U.S. Social Security program investing in equities. According to the brief, investing the program’s trust fund assets in equities would require a large trust fund. Since the program’s trust fund is moving toward zero, rebuilding the fund would require a tax hike to cover the program’s current costs as well as to produce an annual surplus to increase the trust fund reserves.

Other key findings include: 

• Investing a portion of Social Security’s reserves in equities could potentially earn a higher return which would result in less tax increases or benefit reductions.
• However, critics caution that equity investment could interfere with private markets or give the impression that trading bonds for stocks would potentially create new money.

The brief concludes, “Social Security no longer has a sizable trust fund to invest. And rebuilding the trust fund through additional taxes or borrowing may not be either wise or feasible. Thus, while the mechanics are totally manageable, the time may have passed for raising taxes enough to accumulate a meaningful Social Security trust fund that would make investing in equities worthwhile.”

The brief is available here.