The Social Security project’s Old-Age and Survivors Insurance Trust Fund and Disability Insurance Trust Fund did not perform well in 2023 according to an analysis by MarketWatch. This analysis found that the Social Security trust funds underperformed against the official inflation rate in 2023. Despite the decrease in inflation and strong gains in stocks and bonds, the trust funds lost money in real, purchasing power terms.

MarketWatch’s Brett Arends postulates that had Congress decided to invest the funds in an index fund tracking the S&P 500 large-company U.S. stocks, it would have resulted in a 25% gain. If 60% of the fund had been invested in U.S. stocks and 40% in U.S. bonds, it would have yielded about 18% returns. However, Congress chose to hold the fund entirely in Treasury bonds, which yielded less than 2.4% in 2023 according to a report from the Social Security Administration trustees.

Following a loss in the previous year, the Social Security’s Old-Age, Survivors, and Disability Insurance trust funds had about $2.83 trillion in asset reserves at the end of 2022. This was a decrease from $2.85 billion at the end of 2021.

The Old Age and Survivors Insurance Trust Fund is projected to deplete in about ten years, rendering Social Security reliant solely on payroll taxes for retirement funding. Those taxes currently cover approximately 77% of benefits.

The investment policy of putting Social Security money into bonds is not expected to change in the near future, meaning the Social Security trust fund will likely continue to underperform the market and potentially inflation. This is because Congress mandates the fund to invest solely in Treasury bonds.