Investment in the future

Being that I am one of the fortunate citizens in the United States to be the recipient of one of the best investments I ever made – Social Security payments.  Investment?  Have I been hitting the eggnog a bit too heavily or what?  Nope actually, I have been taking my son's advice.  As a licensed engineer, he has always extolled me to "do the math Dad.  Do the math first!!!  Well I did and was I ever surprised.  Now I doubt what I am about to lay down will convince any of my conservative friends that Social Security is not, in fact, an evil communist or at best, socialist plot, to enable our government to take control of our lives but I can lay down some math that is hard to debate.  Here goes.

 

Like most of my upper middle class senior friends, I receive around $1600.00 a month from an account in which I paid around $80,000 during my 40 + working years.  I would have received about $2500.00 a month if I had chosen to wait until I reached full tenure around my 67^th birthday.  I chose man early pay out option beginning at 62 since it is always a turkey shoot whether I would still be kicking at 67.  The Bureau of Labor Statistics says that I would probably live until I was 82 with a 25% chance that I would live until I was 90.  They did not take into account the bullet holes, high blood pressure, diabetes, Parkinson's et. al. that have made a home in my body.   I did take these into account and chose an early option.  I will continue to receive this monthly annuity until I die whenever that might be, and I can look forward to slight annual increases to boot, and yes, it is all taxable income so I do pay some of it back.   But, and this a big "but", my Social Security annuity is guaranteed by the US Government.  Okay "Free Marketeers", le's see what your private firms are offering. 

 

First and foremost virtually none of the available public annuity firms offer annual re-looks and annuity increases based on any facet of the US economic profile.  According to ImmediateAnnuities.com, a 66 year old man would have to pony up just over $128,000 into an annuity account to guarantee him an annual annuity of just $10,000.   Twice that amount for an annual annuity of $20,000 with no protection for inflation.  New York Life will give you a 0.3% annual increase as an inflation hedge but that same 66 year old man would need to cough up $180,000 for that cushion.   For those hardcore conservative "do it myself" crowd well look at these numbers.  The Employee Research Institute, a think tank specializing in retirement programs, notes that fewer than half of all US employees have saved even $25,000 towards their individual retirement plans, and only a third of these folks have saved $50,000.  Forty percent have saved less that $10,000 and a fourth of these good people have saved nothing at all.  To put these numbers in perspective, someone with $25,000 can buy into an annuity (with a .3% annual bump) that will return $1400 a year in benefits.  Increase that to a $50,000 account and your annual benefits jump to $2800.00 a year – or an income of about $54 a week.  Good luck with that. 

 

So when  we started to look for tax cuts it is amazing that we chose Social Security as the one major program to cut into with a taxpayer decrease.  Less money into the program means it will suffer even more than it is now which I detect might be the true rationale of the conservatives in Congress who sincerely hate this "benefit" program.  If they have  now decided to use the Social Security program as a political football, I thin it is only fair that they give us back the "football.  Since Ronald Reagan hit on the idea, the US Government has used the Social Security trust fund as a bank of first choice to balance out the books.  Reach in and jerk out a few billion and then issue some Federal Bonds as security for repayment.  OK – PAY US!!! And no more bonds please.  If the Federal Government would just pay back what it "borrowed" from the trust fund, the Social Security system would remain solvent for a century or more even with the ill-advised tax cut.  Are You Listening Out There All Of You Bubble Headed Tea Party Clowns?  The big bad government is doing big bad things to money that is not theirs.  Sic em!!!