Entangled in Social Security

A few days ago I received a statement from the Social Security Administration. I love these things because they tell me exactly how much I’ve paid into SS and remind me that, thankfully, I’m making better money than I did as a grocery store bagboy back in 1991.

Over the last 14 years (8 of those as a full-time worker), I’ve paid into Social Security and Medicare $5,000 more than I’ve been able to put into my own retirement plans. So, even if you consider SS an insurance program (rather than a retirement program), my insurance payments are costing me more than what I can afford to save for my retirement. And some people are suggesting we raise Social Security taxes?

Run the numbers all you want, but speaking as a purely selfish individual, I’d rather have my money in the market with its known risks and ability to move investments to keep up with changing economic conditions than throw my money into Social Security each year and hope that by the time I retire in nearly 4 decades, the system will be able to pay me back.

This is the problem with SS statements. They paint the false impression that this is my money, that my payments guarantee me something when, in reality, the whole system could be scrapped tomorrow and I’d never see a penny. We’ve created a bit of a monster here. It’s very hard to significantly reform a program we’ve all poured lots of our own money in to. A system that, on regular intervals, reminds us of what we’ve invested and makes us feel tied to it.

Most likely we’ll end up just making some tweaks here and there to shore up the current system and move on until it closes in on another inevitable crisis. That’s a shame. We seem to be committing ourselves to a means to an end rather than just the end itself. There are certainly other ways of ensuring no senior has to live out their last years in poverty. Our current system isn’t efficient or even practical for modern realities. But we’re stuck with it because we’re so entangled in it.