Senators’ Social Security stock plan faces weak odds in simulations
A Cassidy-Kaine plan would borrow $26.6 trillion and invest in stocks, but Boston College researchers found high odds it would miss its target.
By Daniel Okafor · Business Editor
3 min read
A bipartisan Senate proposal would use federal borrowing and stock-market returns to help Social Security avoid projected benefit cuts. The idea matters because Fortune reported that new projections show the program’s trust fund running dry in 2032, leaving benefits facing a 22% reduction unless Congress acts.
Sen. Bill Cassidy, a Louisiana Republican, and Sen. Tim Kaine, a Virginia Democrat, have proposed keeping benefits intact without raising taxes or cutting payments by creating a large government investment fund, according to Fortune. Their plan would have the federal government borrow $1.5 trillion and put the money into stocks and other higher-risk assets expected to earn more than Treasury bonds over time.
The proposal also relies on far more borrowing to keep Social Security paying promised benefits while the investment fund grows. Fortune reported that the plan would require another $25.1 trillion in debt over 75 years to cover the gap between the program’s income and its benefit obligations, bringing total new borrowing to $26.6 trillion.
Boston College’s Center for Retirement Research tested the proposal and found that the stock-market strategy carried a high risk of falling short. Researchers Anqi Chen, Alicia Munnell and Jean-Pierre Aubry wrote that once market swings are included, the investment approach “does not always pay off.”
The Cassidy-Kaine plan assumes annual stock returns of 8.9% before inflation, or about 6.5% after inflation, according to the Boston College report. Even under that return assumption, the center’s simulations found that investment gains would fail to cover the added debt about 64% of the time.
The results look weaker under more cautious return forecasts. The Boston College researchers said simulations using a 4% annual real return showed the fund failing to repay the debt 83% of the time.
The report also warned that borrowing at that scale could itself affect financial markets. Boston College said total federal debt stands at $39 trillion and publicly held debt is already equal to 100% of gross domestic product; adding trillions more could influence interest rates and stock returns.
The center did not reject stock investing as part of Social Security changes. Its report said a different approach — using tax increases or equivalent benefit reductions to strengthen the trust fund, then investing 40% of that fund in stocks — would keep the program solvent indefinitely in most simulations and reduce the need for steeper later action.
Other stock-linked Social Security ideas
Fortune reported that policymakers have considered stock-market-based Social Security changes before, including during the Clinton administration in the 1990s. More recently, Sen. Ted Cruz, a Texas Republican, described “Trump accounts” for children as part of a broader conservative push to remake retirement policy.
The One Big Beautiful Bill Act created tax-advantaged savings accounts for children under 18 with Social Security numbers, according to Fortune. During a Milken Institute Global Summit panel shown by C-SPAN, Cruz said conservatives had looked to Australia’s superannuation system, which requires employer contributions into retirement investment accounts.
Cruz said the child accounts could build support for letting workers direct part of their payroll taxes into similar accounts. Fortune noted that Cruz did not explain how current retirees would be funded if payroll taxes were diverted, since today’s Social Security benefits are paid by current workers’ payroll taxes.
This story draws on original reporting from Fortune.