Sunday, December 31, 2006

The SSA Knows My Name

I'm 24 years old, and I was excited to finally receive my first Social Security Statement in the mail. Color me crazy.

The statement outlines my past income, the credits of work I've accumulated, and the $ my hypothetical surviving spouse and unborn children would get upon my hypothetically untimely demise this year. Every $970 of income qualifies you for 1 work credit, and you can earn up to four credits a year. To collect retirement benefits, you would need to accumulate 40 credits. SS benefits (retirement, disability and survivor) are determined based on your 35 highest-grossing years. That's the short version.

But what intrigues me is the disclaimer on the statement:

"The law governing benefit amounts may change because, by 2040, the payroll taxes collected will be enough to pay only about 74 percent of scheduled benefits."
It seems I should have paid more attention a while back, when the big social security crisis stories first hit the airwaves. Call me crazy, but 74% of something is better than 0% of nothing...isn't it? Besides, being young and (fortunately) able-bodied at the time of this post, I'm imbued with the optimism of youth that I'll make it big by the time I retire, and hence, Social Security will be but a drop in my retirement bucket.


Anonymous said...

74% percent is better than 0%, but 100% is better than 74%. The problem I have with Social Security is lack of control, something that we strive to attain when we're dealing with our personal finances. That's why my preference is to be able to control as much of my finances on my own, versus giving it to some large government body that has little accountability.

It's funny, because I read through your experiences, and it reminds me of me at your age. I purchased my first home at 27, against the advice of my folks, and I too was worried about incurring the debt. However, you soon realize to look at so many things post-tax, and realize that the savings are there with the tax breaks you get on home ownership. That's the largest example, but not the only one.

Great blog, by the way!

WH said...

Thanks! While I know that there are a lot of tax benefits to house ownership, I'm still not sure of this: Is a house a debt or an investment? Or is it neither? Currently, I would consider it a debt , but maybe that attitude will change once my financial circumstances improve? What considerations did you make before you bought your house at 27? (Which, by the way, is such an accomplishment!)

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