00:00 Julie
Just to set the table, Carrie, obviously, there is um, a coming cliff when it comes to social security funding and so that’s why there are sort of these creative solutions being floated to try to to keep it solvent. And I guess one of these was, why don’t we just put the money in the stock market?
00:17 Carrie
Yeah, Julie correct. They they a shortfall is estimated to be, you know, roughly eight years away, seven, eight years away. And at that point, the fund would only be able to pay out about 80% uh, roughly again, 80% of individual’s benefits for social security. So this idea is uh that you would um be able to they would borrow this money and up that trillions that you just mentioned, 1.5 trillion would be set aside in this special investment account, right? And that would be invested in equities and other sort of uh more um investments that could give it a bit more umph because the currently these uh investments for social security payouts are invested in treasury securities which are quite secure. Um now these would be higher risk and the idea is then they would borrow another 25 billion dollars and change uh to pay current benefits over the next 75 years. We’re talking 75 years now. After 75 years, the that investment fund plus would be able to pay back what was borrowed, that 26 trillion dollars plus interest and everything would be grand.
01:26 Carrie
Um, you know, the the Center for retirement Research took a hard look at these numbers. They ran the scenarios and even if the market returns 6.5% over all of those years, it only in their simulations would meet that bar uh 40% of the time. Um now again Julie, there is another option they looked at.
01:48 Carrie
Um if you were to right now, do what’s on the table is raise payroll taxes and cut benefits, um clean everything up for the current bit and moving forward, invest that those social social security funds up to 40% uh not you know, right now 100% in the treasury securities, up to 40% in equities. And that the researcher say that could possibly help solve the problem moving forward in the sense that there would no longer be a need for future cuts. Now, the reality is that that’s probably not going to happen and it would have to happen very soon and not in 2034 in order for that solution to work.
02:24 Julie
Are there any other solutions on the table, Carrie, that are being discussed?
02:32 Carrie
It’s such a hot button. I mean, it’s so much emotion around this topic. I honestly believe and everyone I’ve talked to that they will come to some sort of solution on this. And equity certainly that, you know, lots of people have talked about the importance of of using that investment in these social security funds, putting them into a higher performing investment over time. So, it’s likely we might see some movement in that direction and uh but it’s something that that needs to happen sooner rather than later.
02:58 Julie
Carrie, good to see you. Thank you.
03:01 Carrie
Nice Julie.
