Academic journal article Journal of Accountancy

Investing in Social Security: New Opportunities for CPAs

Academic journal article Journal of Accountancy

Investing in Social Security: New Opportunities for CPAs

Article excerpt

In January, a Social Security advisory group published a report on the long-range solvency of the Social Security system. The Report of the 1994-1996 Advisory Council on Social Security included three different recommendations on how Social Security payroll taxes should be invested, all of which suggested supplementing benefits by investing in the stock market. If some of the Social Security payroll taxes were invested in stocks in an effort to obtain much higher returns, it is likely that taxpayers would have to assume much more-responsibility for their own retirement security.

"Whatever happens to Social Security will have a domino effect on employers and individuals," said David M. Walker, a partner of Arthur Andersen in Atlanta. "Under some of the proposals to restructure the Social Security system, employers and employees will need more education on planning, saving and investing, which means more assistance, and that's where CPAs can help."

However, Walker said major changes in the Social Security system were not likely to occur any time soon. "Nonetheless, there might be some effort to assemble a bipartisan commission to revisit Social Security," said Walker. He also said a congressional commission would have to organize a massive public education campaign on the nature and extent of the problems facing the Social Security system and what the options would be for employers and individuals.

Taking stock in retirement

All three of the advisory council recommendations were intended to increase the advance funding of Social Security's long-term obligations. One of the recommendations was to have the government invest roughly 40% of the trust fund's assets in stocks as opposed to long-term government bonds. …

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