That’s the question. And here are a bunch of answers.
Starting with a pro/con in the Wall Street Journal between Alicia Munnell of the Center for Retirement Research and Mike Tanner of the Cato Institute.
I followed up at Forbes with some thoughts that Munnell and Tanner hadn’t hit on. Namely, that while stock investment is kind of a nothing – higher expected returns, but higher risk to match – people who propose it do so instead of full-solvency reforms rather than in addition to them. So stock market investment could encourage Congress to further delay real reforms.
And here’s another write-up from Alicia Munnell at Marketwatch.
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Decades ago I looked at what value the Trust fund would have had it been invested in the DJ, SP500 and other indexes. Assuming these indexes were infinite and able to absorb the funds with no bull in the china shop syndrome. I calculated that the trust fund would have been exhausted not in 1983, but a few years later.
The problem was never the rate of return. Based on US Treasury rates, the payroll tax on an actuarial basis is about 7% -8%. The OASI tax is 10.6% and has been reduced to 10.03%
The root cause of the problem is paying full benefits to those first beneficiaries who did not pay a full working life time of payroll taxes.
Ida May Fuller worked for three years under the Social Security program. The accumulated taxes on her salary during those three years was a total of $24.75. Her initial monthly check was $22.54. During her lifetime she collected a total of $22,888.92 in Social Security benefits.
SS-OASI has paid nearly every dollar collected out in benefits as soon as it came in.
Like the SS Titanic, Social Security is taking on water and the sea is at the main deck. Better be building your life boat.
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