Provisions Affecting Trust Fund Investment in Marketable Securities

These provisions invest a portion of the Social Security trust funds in marketable securities (e.g., equities, corporate bonds), rather than in special-issue government bonds as under current law. We provide a summary list of all options in this category. For each provision listed below, we provide an estimate of the financial effect on the OASDI program over the long-range period (the next 75 years) and for the 75th year. In addition, we provide graphs and detailed single year tables. We base all estimates on the intermediate assumptions described in the 2011 Trustees Report.

The selections G3 and G5 provide a low-yield or risk-adjusted perspective where equity yields equal the average real yield on long-term Treasury bonds. Thus, these selections have no effect on the actuarial balance of the OASDI program. Many analysts believe the higher expected return for equities should not be included in valuations because the tendency for higher average returns is compensation for the higher volatility in equities. The low or risk-adjusted yield assumption reflects this perspective.

Choose the type of estimates (summary or detailed) from the list of provisions.