Bush administration officials have sketched out proposals for putting some Social Security assets in privately managed accounts.[@@]
One option would encourage workers to put the first $5,000 of assets in a handful of carefully selected investment funds, according to published reports. The default option would be professionally managed “life cycle” funds, or funds designed for workers with specific retirement dates.
Managers of life cycle funds increase the percentage of bonds and other fixed investments in the funds as the targeted investors age.
The Bush administration also is looking into the possibility of expanding the menu of investment choices for workers with at least $5,000 in their personal Social Security accounts.
Democratic senators attacked the proposal today at a hearing organized by the Senate Democratic Policy Committee.
Many Senate Democrats questioned whether the Social Security program faces a serious crisis.
Sen. Mark Dayton, D-Minn., noted that the Social Security trust fund managers have come up with a mid-range economic scenario that assumes the U.S. economy will grow only half as quickly as it has been growing in the past few decades. The trust fund managers’ optimistic scenario assumes the U.S. economy will continue to grow about as fast as it has been growing, Dayton said.