OPINION: Unless drastic action is taken, Social Security benefits will have to be cut by about a fifth across the board starting in a decade, BrettArends writes.
America’s main pension plan saw its investments badly trail the booming markets, competitors, and even inflation, yet again thanks to a rigid investment policy that hasn’t been changed since 1935. The trust fund earned just 2.5% on every dollar invested last year, the trustees have just revealed. That compared with a stellar year on financial markets, where the S&P 500 index SPX, -0.14% shot up 29%, international stocks 11%, real estate trusts 32% and commodities 26%.
Social Security’s investments have underperformed basic pension fund benchmarks in 4 of the last 5 years, 8 of the last 10, 11 of the past 13, and in two-thirds of all years since 1980. The average underperformance during the past 4 decades has been about 4.5% a year. President Franklin Roosevelt had another reason to keep the new program’s money in U.S. government bonds: It provided easy money to help pay for the New Deal. But the policy has proven disastrously costly to the trust fund and the workers who rely on it. Since the mid-1930s, U.S. stocks have outperformed Treasury bonds in total by more than 6,000%. The average big U.S. pension plan, other than Social Security, is today expecting to earn an average return of about 7% a year.
If the trust fund had been invested in a regular mixture of stocks and bonds throughout its history, like every other pension plan, there would be no funding crisis. About 65 million Americans currently receive Social Security benefits. Most are retired workers, though they also include widows, orphans and those with disabilities. Another 175 million Americans currently pay into the system.
Malaysia Latest News, Malaysia Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Teens Are Dating Exclusively Via Social Media: Here’s What Parents Should KnowTeens are dating exclusively via social media which seems strange, but according to my teenagers, it's most definitely a thing these days.
Read more »
Social workers’ field safety in Illinois remains concern after killingIllinois officials are seeking answers after the killing last week of a state child welfare worker during a home visit — the second such tragedy to occur in less than five years.
Read more »
‘Don’t Look Up’ Fails As A Social Commentary On Climate ChangeAs a well-acted and entertaining farcical comedy, 'Don't Look Up' works just fine. As any sort of relevant, edgy commentary on climate change or anything else, it completely misses the mark.
Read more »
The Uptowning of Deep Ellum Is Almost Complete With Austin-Based Bar Green Light SocialAn Austin favorite has arrived in East Dallas. Known for its DJ-driven dance nights and Capri Sun cocktails, Green Light Social has opened its second location in the North Good Latimer District.
Read more »
‘Don’t Look Up’ Fails As A Social Commentary On Climate ChangeAs a well-acted and entertaining farcical comedy, 'Don't Look Up' works just fine. As any sort of relevant, edgy commentary on climate change or anything else, it completely misses the mark.
Read more »