Financing social security; bonds in retirement
...the shift from the payroll tax to general revenues for the portion of the system’s financing associated with the start-up of the program would represent a more equitable sharing of the burden. At the same time, through the payroll tax workers would be paying an amount for their benefits equal to what they would have paid had a trust fund accumulated.
In another paper from the Center, research economist Anthony Webb argues that for retirement income security, households should seek return on capital over return of capital. He briefly discusses short-term deposits, long-term bonds, and Treasury Inflation-Protected Securities (TIPS). He states, "...the true risk-free asset is a portfolio of bonds and, in particular, inflation-protected bonds of appropriate maturities."
Should Social Security Rely Solely on the Payroll Tax?
Report, IB#9-16 (pdf, 7pp/188kB), Aug. 2009
The Case for Investing in Bonds During Retirement,
Report, IB#9-17 (pdf, 6pp/156kB), Aug. 2009