Social Security ...

I will admit that each time I get my social security statement I smile. I open the envelop uttering ... "Show me the Money". It says clearly that "At your current earnings rate, if you stop working and start receiving benefits at age 62 your payment would be about $1,518 a month" (Aside - why does it say about. Aren't slide rules good enough to give me a precise number.) It goes on to tell me about how much I would get if I kept working until 70 or if I become disabled. Seems all good.

BUT ....

Every time I mention social security benefits to my friends and even my financial adviser they say "don't count on it", "you won't see a dime", or my favorite "you are fool to believe you will see any of that money". What?! Why?! It is inconceivable to me that the government won't have my money. According to my Social Security Statement the government started taxing me when I was 16 and won't stop taxing until I stop working. And just when I enter the twilight of my existence on this planet, the government that took my money for 40 years will tell me that the funds are no longer available. Not acceptable.

So what gives ...

Here's where I prove I am write (purposeful).

Let's assume Congress and the President don't pass any legislation to "save" social security before insolvency. I have lost faith in our government's ability to pass meaningful future based legislation … so this seems like a very reasonable assumption. The next assumption is the time to insolvency. The Social Security administrators say 2041; Congressional Budget Office says 2052. Aren't we using the same slide rules ladies and gents? Why are you off by 11 years? Numerical imprecision on this scale on issues of this importance seems incomprehensible and upsetting – but whatever. Let's assume the worst at 2041. Let's finally assume I will retire at 67. I chose 67 simply because that means I retire in 2041 and it corresponds to my full retirement age.

So what do I get? According to the Social Security Administrators I would receive about 75% of my scheduled benefit. Not 100%, but certainly greater than nothing. Why? Just because the surplus is gone I will still be collecting from the naive 16 year olds wondering what the heck is FICA. FICA is old people. At 67, I am FICA. Thanks young buck.

My prediction is that some legislation over the next 35 years will be passed to help Social Security. They will either raise taxes (rate or cap), ensure full coverage (I didn't know some jobs were exempt from FICA taxes), find a way to increase returns, increase retirement age, or something. But in my humble opinion there are two under reported options. Both options may be more likely than anything I wrote about previously. Remember the government has two big Aces in its hand. First Ace - Borrow. You can borrow for Iraq you can borrow for social security. “It is time that we become patriotic for something besides war” (John Edwards). The Iraq war spending could have taken the social security coffers into the 22nd century. Second Ace - Print Money. Of course that leads to inflation but I could argue that is a longer time problem for my kids and their kids. Their problem, not mine. Show me the money!