Social Security

I have recently heard (and read) many stories about how much more Social Security returns over and above what one contributes during his working years and how the excess ought to (at least) be subject to federal income tax. Most disturbing is the notion that if the foregoing is true, it constitutes a massive transfer of wealth from the working young to the retired elderly.

I decided to ascertain once and for all my own status in this regard, and so I requested (and received) from the Social Security Administration a copy of my contribution records (1952 to present) and an estimate of my benefits at age 62 (in 1993). I used that contribution record to compute the lump sum value of my account at age 62. It came to $152,282 (via compound interest at 6% and the fact that my employers contribute an equal amount). The Social Security Administration estimated that I would be eligible for a lifetime retirement benefit of $745 per month at that same age. Determination of the present (lump sum) value of a lifetime (about 20 years beginning at age 62) stream of income of that amount (also using 6% interest) yields $98,963. Thus I have “paid in” $53,319 more than I can expect to “take out.” I recognize that Social Security provides benefits other than individual retirement income so that financially speaking, for me the system seems fair.

RALPH A. SMUKLER

Culver City