TLDR:
If we invest Social Security contributions into broad index funds (SP500, VTSAX) instead of bonds, EVERYONE will retire with significantly more without paying more.
Lower and middle class especially would benefit, and this would also ease government debt from entitlements over time.
Explanation:
Everyone pays SS tax, and all of our SS contributions are 100% invested in treasury bonds. Not a single personal finance expert or book worth anything would tell Americans to allocate 100% of retirement investment in bonds throughout their working lifetime, yet that is how we invest contributions through SS.
Instead, we should take the same money and invest it in the US economy through broad index funds, such as SP500 or VTSAX. The returns are far higher than bonds, and volatility is not a risk as we are talking decades.
I included sample calculations below to show the positive impact on lower and middle class especially.
Sample Scenario
If someone makes 40k throughout their career, working ages 21-65, they would end up with ~410k in SS at age 65.
The same contributions but reallocated into SP500 (average 10.26% return) would net a citizen 3.5 million at retirement.