Is Social Security a Good Deal?

Mar 26, 2012

Few public policy issues have generated as much verbal hysteria, irrational claims, and downright incorrect information as Social Security. And that’s saying a lot. This is a great topic for “Painting with Numbers,” because it’s just not that complicated to understand, provided the numbers are presented clearly and coherently, and that is what this site is most interested in. It’s also a great topic because the U.S. electorate in general, and the U.S. Congress in particular, are facing some extremely important policy issues related to the federal government’s fiscal condition. These issues have gotten increasing focus in the last several years, but, well, this is an election year.

In the coming weeks and months, we’ll visit the topic of Social Security in bite-sized pieces, using the rules and best practices articulated in my book, Painting with Numbers: Presenting Financials and Other Numbers So People Will Understand You. We’ll take a look, for a typical U.S. taxpayer, at questions like:
  • Considering Social Security (or FICA) payroll tax contributions as the investment, and typical Social Security benefits as the return, what is the “investment performance” of the Social Security program?
  • How is the answer to the above question affected by whether you choose to retire at ages 62, 65, or 67?
  • How does the “investment performance” of Social
  • Security compare to typical returns one might expect from IRA or 401-K plans?
  • What impact will some of the policy changes under consideration, like increasing the retirement age, have on Social Security payouts?
  • Is the FICA payroll tax really a “tax”?

I’m not planning to take any political positions. My principal interest is simply to help you understand how it works. My oft-repeated mantra about both presenting numbers and understanding numbers is: You can do this!

“Painting with Numbers” is my effort to get people talking about financial statements and other numbers in ways that we can all understand. I welcome your interest and your feedback.

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