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From: phl@drusd.UUCP (LavettePH)
Newsgroups: net.flame
Subject: Re: Social security
Message-ID: <1200@drusd.UUCP>
Date: Mon, 21-Jan-85 13:23:49 EST
Article-I.D.: drusd.1200
Posted: Mon Jan 21 13:23:49 1985
Date-Received: Tue, 22-Jan-85 05:32:20 EST
Organization: AT&T Information Systems Laboratories, Denver
Lines: 57


One thing being overlooked is the fact that social security is not just an
old age pension plan.  It is also a plan that pays you an annuity if you
become disabled.  It is also a plan that pays your surviving spouse and kids
a pension if you are killed.  In that respect, it is like any other insurance.
The premium is higher than most.  The payments aren't as good as most but,
unlike private insurance, they do increase a little with inflation.

Say for example, you are a college grad, 25 years old, still in hock for your
education, unmarried, haven't gotten around to buying any insurance and out
of a job because the company you worked for just bellied up.  You just found
out that accident you had on the way home from the lay-off party is going to
keep you in bed or in a wheelchair for the rest of your life.  You have 
nothing going for you except the fact that those FICA payments you have so
grudgingly made since you started washing dishes in MacDonald's after school
when you were in high school and from those part time jobs you had while you
were in college have added up to enough payments into the program to get you
a benefit check every month for the rest of your life.  It aint much, but it
is all you got, fella.  No working spouse to support you.  No company benefits
or severance pay from the company that's in Chapter 11-land.  You still owe
six months payments on a car in junk city.  That private insurance you kept
putting off won't help you now.  That $4700 you have stashed away in the credit
union will just about cover what you owe the hospital after Blue Cross has
done its thing.

Each $100.00 of benefits you receive each month represents an annuity with a
present value for you of about $13,000 if we can assume that you are going to
live another forty years and interest rates remain about what they are now.
You can't live on this alone but it will help with the expenses when you move
back in with Mom and Pop or it will be a nice addition to your food stamps and
welfare checks (that you probably also revile) until you can get adjusted to
your problems and get back to working again, if you can.

Nobody likes to pay taxes; I know I don't.  Try to think of the social security
deduction as you would any other insurance premium.  Nobody likes exorbitant
premiums; I know I don't.  But, it might take some of the sting out of it for
you.  After all, any of us could have been that person I described above.

One other thought. If somebody waved a magic wand today and canceled the entire
program and continued benefits only to those now getting them and refunded all
payments to those who have contributed all their lives but have yet to collect
a dime (This would have to be with interest after deducting the "insurance prem-
ium" portion discussed above.) our taxes over the foreseeable future would prob-
ably go up, not down.  Make no mistake about it.  Just as any insurance company
that bails out on its policy-holders would see its board members go to jail, any
congress that bails out on social security and leaves its "policy-holders" high
and dry will see its members lynched.  That's what FDR had in mind when he in-
sisted that the recipients contribute to the program.

The person in their twenties who starts to build an investment portfolio immed-
iately after starting work is a rare bird, indeed.  Even with the advantage of
an IRA it takes fifteen to twenty years to build your assets to the point where
you have a reasonable expectation of surviving on them without help.  I guess 
some of the people who need the benefits of social security the most also com-
plain about it the most.  I know I did.

- Phil Lavette