You know Smart Money's regular feature "10 Things ____ Won't Tell You"— the sometimes informative but mostly cynical column that implies that everyone, from economists to your parents, is out to scam you? Well, the latest is "10 Things Social Security Won't Tell You". As a retort, here's my "10 Things Smart Money Won't Tell You About Social Security."
- Social Security CAN pay its bills. Don't confuse the federal budget deficit with Social Security's self-funded system that has accumulated a $2.6 trillion SURPLUS. Social Security's only connection to the federal deficit is that the bigger the surplus, the more it lends to the U.S. government. In a twist of logic, the more solvent Social Security is, the more indebted the U.S. government becomes. That's not Social Security's problem. Social Security has its own dedicated source of revenues with current projections calling for full benefits to be paid until 2036; after that, revenues will be sufficient to pay 77% of currently promised benefits. The system is likely to be reformed before then.
- The more you earn, the higher your benefit will be. OK, so there may be diminishing returns for someone who has maxed out Social Security every year for 35 years. But this information by Smart Aleck—I mean Smart Money, is not helpful. What is helpful is for everyone, especially women, to know that if they work a little longer and earn a little more, they can increase their lifetime Social Security income.
- Social Security is a better deal now than it used to be. The formula used to escalate benefits for each succeeding age cohort is based on average wage growth, which has caused benefits to be higher for baby boomers than for seniors who retired, say, ten or 20 years ago. Smart Money chose to compare today's retirees with those born in 1915 who were the beneficiaries of a brand new system that paid out more than it took in from those early beneficiaries.
- Want a bigger check? Delay the start of benefits. Smart Money admonishes: "go back to work." However, it then goes on to correctly explain that when benefits are withheld before full retirement age due to the earnings test, the benefit is adjusted at FRA to "account for the money you didn't get while working." The headline is not inaccurate, but it makes Social Security seem punitive when it's really quite accommodative by letting people apply for benefits as early as age 62 even though they're working.
- If you become disabled, Social Security will be there for you. SM's "good luck qualifying for disability" focuses on the negative and is again not helpful. More than 8 million people receive Social Security disability benefits—a lifeline if there ever was one.
- Unemployed at 62? Consider all your options. While it's true that people in most states can receive Social Security and unemployment benefits at the same time, filing for Social Security at 62 may not be the best move if you're unemployed. It might be better to take the unemployment and draw from personal assets to avoid taking a permanently reduced Social Security benefit. Again, Smart Money is not inaccurate, but it's not very helpful.
- People can't change their Social Security number, so don't try to scare them. Back in the day before identity theft, the SSA assigned successive Social Security numbers based on where they lived. So SM astutely points out that identity thieves can figure out your SSN from your Facebook page. Come on. We all need to be aware of identity theft, but this is pandering to fears people already have about cyberspace. Everybody knows to protect their Social Security number and watch for ID theft. If someone wants to figure out your Social Security number based on where and when you were born, there's not much you can do about it.
- SSA has a very low error rate. In fiscal year 2009, the SSA error rates for overpayments and underpayments were 0.37 percent and 0.09 percent, respectively. This is very impressive for a bureaucracy that pays over $700 billion in benefits annually to some 60 million people. Yet SM dwells on the fact that sometimes living people are incorrectly added to SSA's Death Master File. Please.
- Tax planning never stops. OK, so maybe Smart Money is doing a good thing by alerting people to the fact that their Social Security benefits may be taxable. Apparently 42% of people surveyed by the Financial Literacy Center didn't know this. But would SM dare send people to their financial advisor to look for ways to lower their taxable income? Not a chance.
10. As long as you live, your Social Security benefit will be adjusted for inflation. Once again, SM takes the negative view, focusing on the method by which COLAs are determined. There has long been controversy over the use of the CPI-W as the inflation index because it may not accurately reflect the spending patterns of Social Security recipients. But this, combined with all the other snide "things Social Security didn't tell you" just casts Social Security in a negative light when a far better approach would be to help people learn about the system's nuances in the context of appreciating and maximizing their benefits.
