Social Security’s “special issue” investments; very special indeed
Social Security’s Trust Fund, now holding reserves of over $2.9 trillion, is the financial repository for all monies used to pay current (and future) monthly benefits to America’s 62 million Social Security beneficiaries. The money in the Trust Fund earns interest which, in addition to income received from payroll taxes and taxes on personal Social Security income, provides an important source of revenue to help keep the program solvent. In fact, that interest currently represents about $84 billion of annual income from investments in “special issue” government bonds and certificates of indebtedness which earn, on average, about 2.9%. But these special issue bonds and certificates are very special indeed, and are nothing like the average investor can obtain. Rather, the investments provide Social Security with both the higher interest rates inherent in long term bonds, as well as the liquidity of short term investments required to pay Social Security benefits when needed. It’s a win-win situation, as described in this Motley Fool article by Dan Caplinger. Click here to read more.