My "Social Security Statement" came recently. Most of you Readers in the United States get these, too -- these are the four-page mailers from the Social Security Administration. They list your lifetime of earnings taxed for Social Security and Medicare, and give you a list of your promised benefits based on the amount of money you've paid in to the system.
This year's statement left me seething with resentment. The idea that by the time I'm 67 years old, the government will be in a position to simply give me the kind of money that's listed here seems more than a little bit ridiculous. But there it is, every year in black and white, from the government -- a solemn promise that I will have this money to rely on when I'm old and losing my ability to support myself, a solemn promise that I consciously know will be broken.
To be sure, the opening page makes clear that "...by 2037 the Social Security Trust Fund will be exhausted and there will be enough money to pay only about 76 cents for each dollar of scheduled benefits." As it happens, 2037 is the exact year that I will turn 67. So that makes it even more galling -- the government makes a solemn promise, and in the very same document tells me that it's going to break that promise.
This is compounded by the fact that it comes in the form of an annual "statement," not unlike a 401(k) statement, suggesting that Social Security is really some kind of a big investment and accounting device administered by the government. Of course, it is nothing of the sort. The hundreds of thousands of dollars I've paid in to the system over my lifetime were immediately used and there is no "account" being held for me in Washington or Charleston or wherever.
Most people will look at this document and incorporate it into their retirement planning as though it were a matter of course, a bedrock foundation, a safe assumption upon which the rest of their thinking about their golden years can be based. They will skip the prefatory language altogether, and look instead at the compiled numbers on the second and third pages, perhaps reminiscing about the good years and the bad years of their careers, and look at the promised benefits and think, "Well, that won't be so bad." To the extent that they're aware that there is a problem with the Social Security system, they will think that it's either somebody else's problem, because clearly their "account" is secure and healthy; or they will asume that politicians in D.C. will fix whatever problem is there, eventually, because they would never allow anything bad to happen to Social Security.
Here's my prediction. From 2010 to 2036, there will be periodic bouts of public hand-wringing about the impending doom of the Social Security system. Nothing, however, will be done. Then in 2036, taxes will increase significantly and benefits will remain more or less the same. The problem will be "fixed" for the likely duration of my lifetime. After that, taxes will have to be raised again.
But I cannot afford to be so optimistic in my thinking about my own retirement. I must plan for a life in which my monthly benefit will be zero, because that, in truth, is what the government can really afford to pay me.