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Subject:  Re: Social Security Date:  8/7/1999  10:17 AM
Author:  rustedSoul Number:  12940 of 100492

Hey, folks. I didn't mean to start a fight here! The point I really wanted to make was not
mentioned by other posters: my expected returns on Social Security are really not so bad
after all, not nearly so bad as "rumor" would have it.

It's good that you got a good deal on this program. Unfortunately, you will be one of the last ones to get a good deal. The problem with the Social Security system is not what is happening today with the program, but what will happen 10-15 and 30 years from now.

By the time I retire, I will be one of the first generations to pay fully 12.4% my entire working career (previous generations started paying in a lower rate, which gradually increased over their lifetimes). In addition, there will be a hidden cost of 2-4% of payroll which will be required to pay back the principal and interest on the Social Security trust fund bonds. It is estimated that the government will need to draw down these bonds in 10-15 years.

Don't let anyone fool you. The Social Security trust fund is not an asset, but an additional liability against the Treasury which future workers must pay back.

If I calculate all the money I will put into the system, not only will I not receive "S&P500" returns on my investment, not only will it be lower than the Treasury bond rate, it will be NEGATIVE real rate of return (assuming I live long enough to even collect). I am willing to accept a lower rate of return for less risk. However, a system that returns a negative real rate of return is unacceptable.

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