You Have More Than You Think

Where, you might ask?  Look at the Social Security website and online benefits calculator from an asset point of view.  Since the Social Security administration stopped sending out paper statements to you on your birthday, you can now go online and get personal benefit information along with valuable extras.  13 million people have already registered and collected their data.  One key insight may have positive implications for you.

Log in. Find out…
It’s simple.  Go to www.socialsecurity.gov, follow the steps to register.  Once in, you can see your earnings and contributions (important to check for accuracy), benefits, higher benefits if you delay, disability and survivor benefits.  With this site, the US Government has gone all user-friendly on us!  The information can be quite a pleasant surprise for those who have been working, or expect to keep working. Note that benefits are indexed to increase with cost of living adjustments, like TIPS.

You are your own bond portfolio.
Here’s where your ‘hidden’ money might be. Investors often overlook the asset value of those SS payments for life.  For example, say you are entitled to $3000/month or $36,000 per year upon retirement.  Nice, but not what most people would call “rich.” Yet, if you had to duplicate that annual payment to yourself you would have to drop at least $1 million into the long term bond market (30 year treasury yield is currently 3.3%).  Now, the $1 million SS portfolio sounds like more than pocket change.  If you believe like I do that SS will make good on its payouts, you may want to consider allocating $1m less to your fixed income allocation, and $1m more to higher risk/higher return investments. It’s something we can talk about. The point is, all assets count!

Ignore the naysayers
Social Security is a contract between generations. Doomsayers like to treat it as a balance sheet with emphasis on the liability – the right side of the balance sheet – that it represents for the US government. What the doomsters often neglect to point out is that SS is a “pay as you go” system – an income statement account. Lots of money is coming in, and going out.  Social Security is not perfect, but it’s been running successfully now for 80 years, and there is tremendous popular will to keep it going, backed up by those SS deductions that come out of your paycheck all year long. Personally, I have faith in my kids and their friends to keep me funded deep into old age.

Take control
I encourage you to register at the site and retrieve your information.  It’s one of the many steps you can take – along with saving, index investing, and planning – to control your financial destiny.

(Thanks to Michelle Singletary of the Washington Post for alerting me to this website!)

Michelle’s article on checking your social security statement

John Osbon – josbon@osboncapital.com