Just Another Blog
Thursday, March 24, 2005
 
Social Security

Social Security is a complex form of accounting as much as it is a welfare program. The annual report on Social Security and Medicare is out. If there's one thing that I learned at S&P, it is the value of reading the annual report before making investment decisions. Your belief and bet on the future of social security could be an awfully important investment decision.

Fortunately, you don't need to read the entire report. The trustees provide a Summary of the Status of the Social Security and Medicare Programs. I thought this was a very well written and understandable explanation of the state of the program and how we know it's in trouble. People think that everything that the government spits out is convoluted and crammed with legalistic mumbo jumbo. I think this summary - in addition to things from the IRS like their information publications - are a good refutation of that point.

I worry actually about what portion of the population could not understand that summary. It's important, and it ties together lots of different concepts from employment, to math, to insurance, to interest rates, to actuarial estimates. None of it is overly complicated as presented, but I worry that too many people just don't even have the most basic understanding of the principles involved.

I blame public education.