Social Security and Equities: Lessons from Railroad Retirement


The brief’s key findings are:

  • Some have advocated investing Social Security trust fund assets in equities.
  • A similar proposal adopted by the railroads in 2001 suggests two key hurdles: political risk and financial risk.
  • For political risk, the railroads created an independent trust; a better fit for Social Security might be to limit investments to index funds.
  • For financial risk, the railroads set up an automatic mechanism to respond to shocks; Social Security would need a similar mechanism.

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