Assessing the “Sovereign Wealth Fund” Insolvency Solution - Center for Retirement Research at Boston College
A recent Senate Budget Committee hearing provided a forum for Senator Bill Cassidy (R-LA) to showcase a bipartisan proposal he and Sen. Tim Kaine (D-VA) have advanced for consideration to address Social Security’s looming financial disaster. The Cassidy/Kaine proposal, dubbed a “Big Idea,” was a follow-up to President Trump’s February 3, 2025 executive order calling for creation of a sovereign wealth fund completely separate from Social Security’s trust funds and using investment earnings sufficient to fund the projected revenue shortfall (the background of this proposal was covered in a website post in 2023, which can be viewed in full here.)
The Cassidy/Kaine “Big Idea” has caught the attention of many, with some endorsing it as novel thinking, while others have assessed its assumptions as somewhat unrealistic. Among the “Big Idea” detractors is the Center for Retirement Research at Boston College, which, in a post today on their website, characterized the plan as “…unlikely to work.” Their analysis did, however, allow that the concept of equity investments could play a role in fully salvaging Social Security’s future if packaged with some level of tax increases or benefit cuts.
The Center’s post also acknowledged the rapidly closing window of opportunity for Congress to act on this insolvency, noting that waiting until full depletion (now projected for 2032) would be “… too late to offer a permanent fix.” This is a persistent observation across most recommended solutions, with “sooner rather than later” the standard refrain in any number of media accounts.
So, What’s Going to Happen?
What direction corrective action on Social Security’s financial predicament will take is anybody’s guess. After all, the problem has been well known for more than three decades, with the program’s trustees calling for attention in every annual report since the early 1990s. Within this vacuum, many organizations are working toward the common goal of ensuring Social Security’s long-term viability.
One such organization–the Association of Mature American Citizens (AMAC)–has developed a proposal to address the insolvency issue, based on the premise that Social Security must be preserved and modernized to meet the demands of 21st-century economics.
AMAC’s position is that this can be achieved without payroll tax increases through relatively minor program modifications, including changes to the cost-of-living adjustment (COLA) process and modifications to the formulas for calculating payments to higher-income beneficiaries. Changes to the age for maximizing benefits are included in AMAC’s position, along with steps to ensure that a larger percentage of total worker earnings are subject to FICA/SECA payroll taxes. Other changes advocated by AMAC include (1) an increase in the thresholds where benefits are subject to income tax; (2) indexing of these thresholds annually to account for inflation; (3) improved survivor benefits, (4) eliminating the reduction in benefits for those choosing to work before full retirement age; and (5) improved savings tools for future retirees, including a savings account that builds estate value.
AMAC is resolute in its mission to preserve Social Security for current and future generations and has drawn the attention of lawmakers in D.C., meeting with many congressional offices and staff over the past decade. Most recently, the suggested legislative framework has been reviewed with Social Security Administration officials. For more information on the AMAC proposal, read the “AMAC Social Security Guarantee” document on their website.