Social Security

Last Updated Feb 5, 2010 11:28 AM EST

Can I rely on my Social Security income? Shouldn't we just privatize it?

by Jane Bryant Quinn

Many people imagine that they'd have more money if they could ditch Social Security. "Just give me my contribution and my employer's, and I could invest for a higher income," they say.

I doubt it.

To begin with, you probably wouldn't invest it all. You'd spend some. Some would be thrown away on bad investments. You might be crushed in a bear market (think 2008). Some might invest too conservatively. In the end, you'd probably fail to build the enormous sum needed to pay yourself a Social Security-equivalent income that would keep up with the inflation rate for the rest of your life.

And if you failed, what then? Even if you could amass this money, many of your fellow citizens couldn't. You might be OK, but a large group of seniors would be broke — just as they were before Social Security began. Welfare payments would soar.

Without Social Security, you'd also lose the survivor benefits paid to your spouse and children if you die. Those checks keep many struggling young families afloat. You'd also lose disability payments if you became so ill or badly injured that you couldn't work.

Despite all the scare stories you read, Social Security isn't in serious trouble. Everyone knows what it's going to take to keep the system going: a small additional payroll tax plus trimming future benefits in a modest way. Eventually it will get done. Compulsory Social Security protects part of everyone's old-age income from the hazards of life, and we should be grateful for it. Without it, large numbers of our elderly would live poor.

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Excerpted from Making the Most of Your Money Now by Jane Bryant Quinn

Copyright 1991, 1997, 2009, by Berrybrook Publishing, Inc. Reprinted by permission of Simon & Schuster, Inc

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