Plan to Retire but Leave Out Social Security

NYT reported I’ve often wondered what Social Security means to me, but never expected to read the following, rather astounding, explication: “Unless action is taken soon to strengthen Social Security, in just 11 years we will begin paying more in benefits than we collect in taxes,” the letter said.

Now you see why Bush wanted to deal with the problem.

“Without changes, by 2040 the Social Security Trust Fund will be exhausted.” Exhausted? I’ve been fairly pessimistic about the future of Social Security and tend to side with those who recommend not counting on those benefits when calculating one’s retirement. But I thought the Social Security Administration itself might hold out more hope for its own future — let alone yours and mine.

Facts are facts.

Evidently, it doesn’t. The reason for this, said Olivia S. Mitchell, a professor at the Wharton School of the University of Pennsylvania who has served on the president’s Commission to Strengthen Social Security, is a matter of addition and subtraction — mostly the latter. Technically, Social Security is taking in more money than it needs right now — it’s just that the Treasury keeps borrowing those funds, as much as $1.9 trillion,

And the only way to stop that is Personal Accounts. Putting those IOUs in a "lockbox" does not do any good, and even if you truly lock the funds up it will not solve the problem. You need to put those funds into a way where they can grow, and that means investment, and it would be foolish to allow the government to decide where to invest the funds, because they would invest them in social engineering places. Democrats would invest them one way, Republicans a different way, but neither would be investing them with an objective of getting them to grow the most, yet without excessive risk.

Professor Mitchell said. Luckily, the Treasury has given the Social Security administration I.O.U.’s for all the money it borrowed. But those I.O.U.’s may never be redeemed, she said, because given its current fiscal path, the Treasury is unlikely to be able to repay that money.