No one has a crystal ball showing what the future will bring. That’s why when people invest, they often try to diversify their funds across a range of options. Some investments may end up below average while others excel, but hopefully they will balance out, providing a good overall return while maintaining the safety of the initial investment.

Recently, the OIG examined what would have happened if the Postal Service had been able to invest its pension and retiree health assets in a diversified portfolio, the same way private sector companies, state and local governments, and even some other federal entities can.

When these employers set aside money to pay for future pensions and retiree health benefits, they typically invest in a range of stocks and bonds and even other assets. In contrast, by law, the Postal Service’s pension and retiree health assets are invested in U.S. Treasury securities, which are very safe but generally have lower returns than other investments.

As of last year, the Postal Service’s pension and retiree health funds totaled $298 billion, which is a lot of money but not enough to cover the Postal Service’s estimated liabilities.

Our white paper asks what if, immediately after reorganization in July 1971, the Postal Service could have invested in a diversified portfolio of 60 percent stocks and 40 percent bonds, leaving everything else the same. The answer is that instead of $298 billion, the Postal Service would now have $1.2 trillion in assets. That would more than cover the Postal Service’s existing liabilities.

You can learn more by reading the paper, Historical Analysis of USPS Retirement Fund Returns, or by listening to our podcast.

After you check them out, share your thoughts below.