BlackRock's Billionaire CEO Says Wall Street Can Fix Social Security. Could It Work?

A hedge fund CEO is advocating for the government to invest Social Security money in the market. But experts worry this would create a windfall for Wall Street — not retirees.

Larry Fink, chairman and CEO of BlackRock, is urging policymakers to consider using America’s flagship safety-net program like a giant brokerage account — using borrowed money. In his annual investor letter, the hedge fund titan advocates for what he calls “market-based approaches.” He writes, “Could a portion of the [Social Security] system be invested more like other long-term pension plans?”

Experts are skeptical. In a 2023 paper, researchers from the Center for Retirement Research at Boston College write, “Equity investments involve greater risk.” And that risk could be significant. While the S&P 500 had returns of nearly 16% last year and averages about half of that over the long term, this forward momentum isn’t consistent. In 2008, for instance, the value of the S&P fell by nearly 40%.

Another key issue, according to Michael Wicklein, currently a Ph.D. student at the University of Chicago and one of the authors of the paper, is “where the money to invest would come from.”

“Because Social Security is already facing a projected shortfall, building up a meaningful pool of assets would likely require either higher payroll taxes or borrowing from general revenues,” he tells Money via email. Neither of those two options, he adds, would address the program’s two trust funds becoming insolvent in just six years.

In the BlackRock letter, Fink references a proposal advanced by Sens. Bill Cassidy (R-La.) and Tim Kaine (D-Va.) that would create a new, $1.5 trillion investment fund for the benefit of retirees.

“I’m skeptical that that will help out the Social Security trust fund to any meaningful degree — or beneficiaries,” says Mark Zandi, chief economist at Moody’s Analytics.

Zandi raises two primary concerns about this plan. For starters, the government would have to pay someone to manage all that money. "Wall Street is going to want a fee," he says. Those fees would reduce investment earnings.

A bigger problem: Like Wicklein, Zandi points out that the only way for the Treasury to “create” a $1.5 trillion pool of money is to borrow it, either by taxing Americans more or by issuing debt. Combined with management expenses, the cost of servicing this debt would put a significant dent in the premium the government — in other words, taxpayers — could earn from taking on investment risk.

The authors of the 2023 paper come to a similar conclusion, writing, “borrowing to [invest in equities] does not guarantee any additional resources for Social Security.” They acknowledge that the idea has appeal, but given the increased risk and cost of borrowing and managing the funds, “the time may have passed for raising taxes enough to accumulate a large enough trust fund to make the effort worthwhile.”

Other policy experts use stronger language to describe the proposal. "This is a dangerous debt-funded gamble that would come with huge risks and costs," the nonpartisan Committee for a Responsible Federal Budget writes in an analysis published this week.

What should the role of Social Security be, anyway?

“Social Security provides stability, but it doesn’t allow most Americans to build wealth in a way that grows with their country,” Fink writes in his investor letter.

This isn't wrong. But the idea that people should rely on Social Security to grow their net worth in the first place is misguided, Zandi says. "Social Security is income support for disability and old age. I don’t know if that's the vehicle you want to use to help build wealth," he says. "[It] is designed to provide support to all Americans. Given that objective, you want to be as conservative as possible and as prudent as possible."

People build wealth by investing in stocks or bonds, buying homes and earning interest on their savings. Although Fink makes the point that a lot of Americans don’t have the opportunity to do this, Zandi says there are plenty of other ways policymakers and corporate executives could make these wealth-generation methods more accessible and incentivize people to build a nest egg.

The traditional model of retirement financing is often described as a three-legged stool. Ideally, retirees would be able to draw income from a combination of Social Security, employer pensions and private investments like 401(k)s and brokerage accounts.

Private investment returns fluctuate according to market performance. Pension funds hire professionals to manage investments in a mix of assets, which they do with varying degrees of success. “Even though the stock market grew by more than 40% from 2023 to 2025, pension funds only earned a 15% return on their assets over that period," another Center for Retirement Research paper notes.

Social Security, on the other hand, was designed to be insulated from the risk of loss. Its rapidly shrinking trust funds are held in ultra-safe U.S. government debt. The lower yield of Treasurys compared to stocks isn’t a flaw that needs fixing. It’s a safety premium that allows Social Security to serve as a stable source of income.

"You want to invest that in the safest thing on the planet,” Zandi says. "That’s got to be rock solid."

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