An Argument Against Privatization of Social Security - MarketWatch
Social Security is in trouble…no doubt about that. In fact, we’re now less than a decade from the program reaching its point of insolvency–the point at which all accumulated reserves are fully depleted. These reserves, which had reached a high point of nearly $3 trillion just a little over two years ago, are now being used to supplement tax revenue so that promised benefits can continue. Reaching full trust fund depletion would, according to the most recent Social Security Trustees Report, cause the program to revert to a pure cash basis and cut benefits 23% across the board.
If you’ve been tuned in to the airwaves over the past month, none of this is news. In fact, there has been a daily torrent of opinions and conjecture regarding what to do about it. In past years, and we’ll likely see it again this time around, one of the frequently expressed ideas is that Social Security should move away from the current requirement that incoming revenue be invested in Treasury bonds in favor of equity markets. Again, this is not new…it’s been raised time and time again over the years.
But would a move to equity markets for Social Security reserves be the right move? Yes, say some. Maybe, maybe not say others. No, says MarketWatch contributor Mark Hulbert. In a post on marningstar.com, Hulbert dissects the issue of where best to invest Social Security revenue, concluding that a full analysis of market performance suggests that moving these funds to the stock market presents a “far greater degree of uncertainty than exists under current financing arrangements.”
Read Mr. Hulbert’s full post here…