‘Teetering’ Social Security: Other Views

I found the letter “Blessed Are Today’s Recipients of a Teetering Social Security” (Jan. 8) by baby boomer Dennis Robman to be infuriatingly full of false figures and conveniently myopic thinking.

Take his hypothetical case of an earner contributing the maximum to the Social Security Fund. (I should have been so lucky in 1941 when the minimum wage was 40 cents an hour.) Mr. Robman comes up with a contribution of $34,000 over 47 years, with his pensioner receiving a payoff of nearly $500,000.

Really? Let’s consider a few more figures in this case while leaving out any mention of debts of gratitude owed for helping build this country to its present state of wealth. Just some additional facts:

1. Does Mr. Robman appreciate the fact that for very many of those 47 years, the earner’s contributed dollars were worth 10 to 15 times the value of the present-day dollar?

2. Has he considered the great amount of uninterrupted compounded interest that the earner’s Social Security contributions should have accrued? How much would even a single $100 savings deposited in 1941 be worth today?

3. Does he know how consistently the federal government has drawn further value from this totally independent fund by using its surpluses to try and help balance the budgetary books? (In other words, just the opposite of adding to the deficit.)

4. Finally, Mr. Robman is certain that before he can collect his own pension, the fund will go bankrupt (though it is in very solid financial shape at present). The strange, sad fact is that if there are enough baby boomers thinking the same way he is, it will become self-fulfilling prophecy.

PAUL SCHNEIDER

Idyllwild

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Robman complains that “rich” retirees like the Talberts will bankrupt the Social Security system before he becomes eligible for his share.

His calculation that the Talberts, since 1941, contributed $34,000 and have received $175,000 in six years of benefits is sheer greed generation computation.

The Talberts’ $34,000 contribution was matched by their employer’s $34,000, which presumably would have otherwise been paid to them in added salary, for a real contribution of $68,000.

Had the Talberts been allowed to invest their money at a conservative 6%, they would have accumulated over $250,000 at retirement in 1988. Thus their $175,000 of benefits to date hasn’t come close to a “break-even” with their contributions.

If the Talberts had been given the freedom to handle their own retirement, the $250,000 at 6% could have provided them with $15,000 per year forever or $21,000 per year for 18 years.

In summary, the Talberts, if they live reasonably long, will have received a fair but not outstanding return on their investment.

Mr. Robman’s concern, however, is not unreasonable. If his understanding of basic finance is typical of his generation, they will certainly require considerable government financial aid in their later years.

NATHANIEL BRENNER

Irvine