How Well Do You Understand Social Security?
Social Security‘s Handbook has 2,728 separate rules governing its benefits. And it has thousands upon thousands of explanations of those rules in its Program Operating Manual System, called the POMS, which provides guidance on implementing the 2,728 rules. Talk about a user’s nightmare!…
One of my engineers and I calculated that for an age-62 couple there are over 100 million combinations of months for each of the two spouses to take retirement benefits, spousal benefits, and decided whether or not to file and suspend one’s retirement benefits. There are also start-stop-start strategies to consider. Each combination needs to be considered to figure out what choices will produce the highest benefits when valued in the present (measured in present value). For some couples who are very different in age, survivor benefits also come into play. In that case, the number of combinations can exceed 10 billion.
Clearly, not enough Americans understand social security.
Just shows how ridiculous it is.
How can you even come up with that many rules?
I understand Social Security perfectly: it’s a Ponzy scheme created by Franklin Roosevelt. It takes 15.3% of my pay and transfers it to seniors (who contributed a much smaller percent of pay) so they can retire early, travel and bequeath assets to their offspring. By the time I’m eligible for benefits, the number of workers will be so small (by comparison to beneficiaries) that my benefits will have to be cut. So, instead of earning no return — or a slightly negative return — I will get totally screwed.