Cassidy-Kaine's bipartisan push to invest Social Security funds in stocks, bonds gains momentum
Why the change is being proposed
According to Newsweek, the Social Security Trust Fund, which pays retirement benefits to millions of Americans is projected to become insolvent by 2034, according to Treasury estimates. If no action is taken, beneficiaries could see a payment cut by 23 per cent which could trigger financial distress for senior dependents on these payments for everyday living.
ALSO READ: Social Security: Why beneficiaries may receive reduced payments from July 2025
Currently, the Trust Fund is limited by law to investing in low-yield Treasury bonds. Cassidy argues this strategy is outdated and unable to keep pace with growing retirement demands.
The Newsweek report quoted Cassidy stating in a CNBC interview saying that the US administration is losing money on these bonds at the moment. Cassidy added, 'We propose a separate fund…invested in the US economy which will generate better returns.'
Details of the Cassidy-Kaine proposal
The senators' plan, the report added, outlines a comprehensive strategy for a $1.5 trillion investment fund to be established over a period of 10 years. The fund is designed to have a 75-year holding period which allows it to mature before any withdrawals can be made.
The fund aims to invest in a diversified portfolio which includes stocks, bonds, and other financial instruments thereby ensuring a broad range of investment opportunities. Importantly, the fund will operate independently from the existing Social Security Trust Fund.
ALSO READ: Monthly social security checks could be cut by this year if Congress doesn't act
The overarching goal of Cassidy-Kaine proposal is to emulate the successful models of state pension funds and international systems which have demonstrated the ability to achieve higher returns over time.
Experts' opinion on Cassidy-Kaine proposal
The Newsweek report quoted experts saying that the proposal is bold but not without risks. Alex Beene, financial literacy instructor at University of Tennessee, told the publication that it wasn't the first idea of its kind but 'it's exactly the type of creative thinking Congress needs'.
While Kevin Thompson, CEO of 9i Capital Group, cautioned that the proposal sounds good in theory, however any move from Treasuries to riskier assets must be 'backed by strong modeling and risk analysis'.
Though Treasury yields are higher now than in past years, critics said introducing equities into the mix could increase volatility and political resistance.
What's next for the proposal
Although the Cassidy-Kaine proposal has not been formally introduced in Congress, both senators are urging swift action. In a recent Washington Post op-ed the duo warned that waiting too long could lead to difficult and preventable consequences.
FAQs
Q: What is the Cassidy-Kaine proposal for Social Security?
A: It's a bipartisan plan to create a $1.5 trillion investment fund to support Social Security, using higher-yield assets like stocks and bonds.
Q: Why is Social Security at risk?
A: By 2034, the Social Security Trust Fund may run out of money to pay full benefits due to demographic shifts and low investment returns.
Q: How would this new fund work?
A: The fund would invest in a diversified portfolio and be held for 65–75 years. Returns would be used to supplement the existing trust fund.
Q: What's at stake?
A: Without reforms, retirees could see benefit cuts of up to 23 per cent by 2034. The proposal aims to avoid that outcome without raising taxes.
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