Can better interest rates help Social Security’s finances?
Despite all of the negative press you read about Social Security’s finances, the fact is that the Trust Fund is flush with about $2.85 trillion dollars in assets. Those assets are, in reality, special issue government bonds which yield interest, and that interest is one of the things keeping the Trust Fund balance growing at this point in time. But, that’s about to change within the next few years when Social Security will start paying out more in benefits than it receives in revenue. Because the interest rates on those government bonds is, relatively speaking, quite low, some have speculated that changing the Trust Fund’s investment policy would enable it to take advantage of rising interest rates, which would, in turn, do much to help the program’s solvency. But, as this Motley Fool article by Dan Caplinger explains, any growth in interest income by taking this step would not be enough to solve Social Security’s financial issues. Click here to read more.