Dear Rusty: For most folks collecting Social Security (SS), you get back what you put in within three to five years, so for those that scream: “SS is not an entitlement, it is my money,” that is not entirely accurate beyond three to five years. For me personally 4.4 years is the number. But had I been able to invest that money over the 43 years I worked at a modest 6 percent rate of return, I expect the amount would have been a lot more. And of course, the stock market averaged 9.5 percent over that time. Perhaps the Social Security Administration (SSA) should invest in the stock market instead of U.S. Government treasury bonds.

Signed: Interested Observer

Dear Interested Observer: You bring up a point we frequently hear — that if, instead of paying into Social Security, I had invested the same money in the stock market I would have gotten more. That, of course, might be the case if you had the unwavering discipline to religiously invest the equivalent amount in the market, avoiding the temptation to use that investment for any other reason. And life is full of good reasons — financial emergencies, for example, or the simple temptation to buy something desperately needed, or just occasionally skipping a month to pay bills. Also, the stock market is notoriously volatile, which can create substantial angst for investors who are faint of heart. The fact is that Social Security provides guaranteed financial growth from the age of eligibility (normally 62), up to age 70 when the maximum benefit is attained. Benefits claimed at one’s full retirement age (FRA) are about 24 percent to 32 percent more than if taken at age 62 (depending on FRA), and benefits taken at age 70 are about 75 percent more than benefits taken at age 62. And that is guaranteed growth for those with the patience to wait longer to claim.

You may recall that the idea of investing Social Security reserves in the stock market has been floated a few times in previous years, but accompanying risks made Congress essentially unwilling to even entertain the idea. It has always been a political “hot potato” and those who suggest it are usually castigated for wanting to “give SS money to Wall Street,” so I expect it is unlikely to happen. Guess we’ll need to be satisfied with the interest on those Special Issue Government Bonds (which, by the way, returned about $67 billion to the Social Security Trust Fund in 2023). FYI, the average interest rate for new deposits to the Trust Fund in 2023 was 4.1 percent, and the overall effective rate of return on all Trust Fund assets was 2.4 percent.

Social Security has some issues and will face some financial difficulty in less than a decade unless Congress enacts program reform soon. But it is a program that most seniors rely on for a major part of their retirement income and one which keeps more than 22 million Americans out of poverty. Here at the AMAC Foundation, we strongly advocate for sensible Social Security reform and we’re very optimistic about the program’s future. But Congress needs to act soon to avoid a cut to everyone’s Social Security amount in about 2033.      

Russell Gloor is a national Social Security advisor at the AMAC Foundation, the nonprofit arm of the Association of Mature American Citizens (AMAC). The 2.4-million-member AMAC says it is a senior advocacy organization. Send your questions to: ssadvisor@amacfoundation.org.

Author’s note: This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation’s staff, trained, and accredited by the National Social Security Association (NSSA). The NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity.