Should Social Security invest in equities?

Abstract

The brief's key findings are: (1) Investing part of Social Security's reserves in equities has obvious appeal: a higher return means less tax hikes or benefit cuts. (2) But critics fear that equity investment could interfere with private markets or signal that trading bonds for stocks creates magic money. (3) The evidence from the U.S. and Canada shows that such investing through government retirement funds is feasible, safe, and effective. (4) While experience suggests that equities could work for Social Security, the time may have passed. (5) Social Security's trust fund is careening towards zero, and rebuilding the fund may not be wise or feasible.