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Dear TMF Pixy:

Just finished reading your "Last Word on Social Security" and want to thank you for presenting the facts in easily comprehendible language. I believe we need more education about all things political (and financial for that matter). We need to have these facts before we can discuss improving the system. Your facts as usual are indisputable, but I do take some exception with your comments/observations.

I too voted for Barry in my second presidential election, which I guess merely proves that we are both relatively advanced in age and not hesitant to reveal it. My comments are the following:

(1) I too am cynical about SS, but primarily because of the way it is sold and manipulated by politicians.
(2) As you indicate, the system is not under our personal control and as such may not live up to the Security part of the name. However, into the near future at least, we do have a contract of sorts with the Federal government that allows us to use a payment schedule to plan for our retirement. Or do you use some kind of factor in your calculations that is based on a confidence level of receiving payments?
(3) Under Myth 3 you state that you will receive all that you put into SS after 3.4 to 4.4 years of collecting SS, depending on when you start receiving payments. This is very misleading. As you well know, if you take the total payments that you and your employer have put into the fund over your working time and calculate what kind of nest egg you would have at retirement, it comes to a much larger payment then you will receive from SS - even with a relatively conservative return rate and a healthy deduction to pay a disability insurance premium. The advantage works even for relatively low wage earners.
(4) Under Myth 2 you indicate that since people tend to spend for the moment they should not be trusted to save/invest money on their own and furthermore should be saved from the consequences of their actions. This is the tired old argument for SS. I would ask: if people cannot be educated to do the prudent thing (which I believe they can, particularly if they are forced to face the consequences ala welfare reform) how do we expect them to make reasonable decisions in the voting booth?

Ultimately I would prefer to see SS totally phased out. Its based on and propped up by too many myths.

Can we start a discussion about the effects of inflation on retirement savings with some historical perspective?


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