I agree with everything both you and Dan are saying but the "insurance" analogy only carries so far. For those who make it through life without any of the curve-balls life can throw at a person where a Social Security "Insurance Claim" is warranted; there should be no S.S. payments at all. The program was designed in a different time when the country was reeling from the depression and retirement savings were dubious at best.
The forward looking mindset needs to shift to "I paid into it but I hope I never need it". No different than one would hope to not be in a serious car wreck or a tornado blows down one's home when paying a true insurance premium.
Maybe this approach would also begin to shift some peoples' ill informed mindset and resultant life choices driven by the notion that Social Security will be or should be their sole retirement fund.
It needs to truly become the "safety net" and not part of the tightrope itself that we all walk in life.
The impending deployment of retirement accounts able to be funded soon after birth is a good start and another arrow in the quiver to right size this S.S. albatross that hangs around the neck of the country. I hope some default funding from the government becomes the norm along with auto-investment in an equity index. It will be a far better investment than doling out S.S. funds by default to those who do not need the "insurance" years from now.
One can dream........
My thought is that tools of this nature appeal to people who have not needed or wanted to claim Social Security prior to FRA or age 70. For those in this category, it potentially becomes an exercise of examining how to attempt to get the best return for an "investment" (albeit a forced one) from all the years of Social Security related payroll deductions.
Keying of Dick Quinn's standing view that Social Security is a form of insurance; I believe this view would be shared by Franklin Delano Roosevelt (FDR) if he were able to add comment here. In any case, why not transition the S.S. system into something akin to true insurance? When you take out and pay into a home owner or auto insurance policy you don't get a guaranteed annual payment from these policies (other than small periodic dividend checks from mutual policies). Could you imagine the even higher cost of insurance if we all got some form of regular diluted income from these policies?
a) While I do support "keeping the promise" for those who have already started drawing benefits or at least passed or approaching their their FRA; some phase down or "freeze" of benefits seems in order for those who are years away from retirement and do not need the "insurance" of a monthly check from Uncle Sam in retirement. For those paying into the system already but years away from retirement this would be akin to the "freezing" of pensions many of us (non-government workers) experienced in our careers during the transition to 401Ks. As has been suggested here by other writers, some of the funds after the "freeze" could be invested in he stock market to fill the gap on the "promise" for those who started paying in but are years away from retirement.
b) Thereafter, anyone entering the work force would be truly on an "insurance" basis-only receiving benefits on a needs basis after retirement and or if experiencing a life crisis earlier in life as is customarily covered by the "insurance of S.S. today.
c) To be clear, everyone earning wages would have to pay into the S.S. "insurance" pool as everyone could at some point in their life need the "insurance" plus it's the right thing to do.
d) All that said, instead of continuing to figure out how to grow S.S. and tax more, perhaps the focus should be on paying out less or none to people who will not need it in future years while still providing the "safety net" that FDR envisioned.
e) There also seems to be a psychological issue surrounding S.S. that needs a major shift. Presently it is something people look forward too and tend to lean on /overestimate the future benefit of as they make financial choices in pre- retirement life. Seemingly all too often they are disappointed after starting to collect S.S. then complain it's "not enough". In a true "insurance" paradigm, it really should be thought of as "I sure hope I never need this but it's there if all does not go as planned". The noisy S.S. tax debate will decrease in volume-to some degree at least- when the system is not facing perpetual guaranteed payouts for all.
Great article Rick. This really resonated with me as a fellow career-long alum of the Aerospace Industry over a virtually identical time frame (I also started with GE in the fall of 1985). The "family tree" of the Aerospace/Airline industries is a history buff's dream to study but for the people working in the industry, a challenge at times.
I gained great admiration for the factory workers on aircraft assembly lines during my early days in the late 1980s while working in Southern California. They would move from employer to employer depending who had the latest government contract. As best I understood it at the time, there was very little pension accrual happening with all those moves and portable 401K's were not yet mainstream.
On the flip side, a relative of mine stayed put at the same aerospace component company for his entire career, survived approximately five acquisitions and finally opted for a severance package during acquisition number six into retirement. Not bad.
I sometimes wondered why I was "still" in that industry as the years went by. In retrospect, if I could rewind time, I'd do it all over again. It was never boring and at times if anything, just a little bit too exciting.
James, another great article. Please confirm my understanding of the following: in a case very similar to what Linda describes below BUT the spouse who died had NOT started claiming Social Security yet, and the younger, surviving spouse is not yet claiming S.S. either: if the surviving spouse claims S.S. a bit early at 65 {while waiting for her FRA (67) to claim the higher survivor benefit}....here is the question: she can only claim her own S.S. and is NOT eligible for the potentially higher spousal benefit because the higher earning spouse has passed away. Correct?
Dan, I agree that the 6.2% rate has been too low and as Dick references evidently 6% of the workforce earn above the cap above which the tax is no longer deducted. I was "fortunate" to be in that 6% for most of my career. For years it has never made sense to me that when I reach 70 (I still have a few years to go) the stressed Social Security (S.S.) system is going to send me a "check" each month. As I have referenced in these pages before, my view of S.S. when I was young was pessimism (that I'd ever see any S.S.)- followed by indifference/mixed feelings as to why I should ever receive anything - to now as I approach 70, derision. I plan to either donate my S.S. proceeds (if I ever receive them) or use them to stuff grandchildren's 529's and or "Trump Accounts".
With all this said, while it won't entirely fix the S.S. system's many shortcomings; there ought to be a win/win path for higher income people to pay their fair share to support the system for those who NEED it then have a reasonable path to opt out of ever receiving benefits.
"Win/win" might mean that the "cap" is replaced with a "threshold" above which the 6.2% (or prevailing %) of an individuals income is contributed to a mandatory Total Market Index Fund in a de-facto IRA account of sorts. If a person participating in this program waits until 70 they would have the irrevocable option of either collecting S.S. albeit predicated on a higher level than the current "cap" since they contributed more *or* opt out of S.S. benefits entirely and revert to having access to their Total Market Index de-facto IRA which they can then invest as they see fit. They would then pay capital gain tax on any withdrawals, the proceeds of which would flow into the Social Security Administration. Note: if they for whatever reason opt to collect traditional S.S., they forfeit the IRA and the proceeds move into the Social Security Administration coffers.
In summary:
Remove the liability of the 6% of the S.S. recipients who surely don't need it (a % which I think could be grown) from the distribution/liability side of the S.S. program.
Offer a segment of the population an opportunity for more growth in retirement savings (and investment in the U.S. Equity Markets) thereby removing virtually any incentive from tapping their traditional S.S. benefit.
Arguably the "6%" group could end up paying more relatively speaking into the S.S. system than they do now while having the option of never drawing any S.S. benefit all while having the "win" of another individual retirement account awaiting them in retirement.
On a positive note, I have observed quite a few people who never had the interest, nor spent the time, truly mastering moderate- to high-level retirement planning. Their interests were in other areas. That said, they lived/do live financially conservative lives and never had outsized expectations of what Social Security was supposed to provide on a relative basis. Many, but not all, of whom I speak were old enough to have actually lived through—and were historical observers of—the period of time when Social Security was established. On average, I would say these people were/are some of the happiest people I have known. Without ever reading, or perhaps even knowing about, Bogle, they found their own version of “Enough.”
I think these people don't get enough "press," but in a way, I have always admired them.
On the less positive side, two thoughts come to mind:
I only observed one union, among the many I dealt with, that ever earned its keep when it came to assisting its members to optimize retirement benefits, etc., that were being offered by the company—and indeed beyond.
The cohort I have zero sympathy for includes those who had at least reasonably good income for years, combined with overspending during their working years (never finding their definition of “Enough” until it was too late), resulting in “Not Enough” and a downward lifestyle adjustment upon retirement... and then they argue for more Social Security, etc., and are mad at the world. I know/have known quite a few of these people too, and they are NOT among the happiest. I think these people get too much "press".
James, this well written piece provided another HD "knowledge nugget" for me. I somehow missed the "50% Rule" while researching the Social Security (S.S.) landscape for my spouse/family information document in the event of my demise or becoming incapable of navigating all this. While it would only benefit us for a short time (assuming I make it to 70 when I plan to start SS); it is very nice to have the information. My long standing general pessimism and indifference toward S.S.does not diminish my desire to understand the details. Thank You
Comments
I agree with everything both you and Dan are saying but the "insurance" analogy only carries so far. For those who make it through life without any of the curve-balls life can throw at a person where a Social Security "Insurance Claim" is warranted; there should be no S.S. payments at all. The program was designed in a different time when the country was reeling from the depression and retirement savings were dubious at best. The forward looking mindset needs to shift to "I paid into it but I hope I never need it". No different than one would hope to not be in a serious car wreck or a tornado blows down one's home when paying a true insurance premium. Maybe this approach would also begin to shift some peoples' ill informed mindset and resultant life choices driven by the notion that Social Security will be or should be their sole retirement fund. It needs to truly become the "safety net" and not part of the tightrope itself that we all walk in life. The impending deployment of retirement accounts able to be funded soon after birth is a good start and another arrow in the quiver to right size this S.S. albatross that hangs around the neck of the country. I hope some default funding from the government becomes the norm along with auto-investment in an equity index. It will be a far better investment than doling out S.S. funds by default to those who do not need the "insurance" years from now. One can dream........
Post: Is saving really that hard? Nope, not for the great majority of Americans.
Link to comment from April 28, 2026
My thought is that tools of this nature appeal to people who have not needed or wanted to claim Social Security prior to FRA or age 70. For those in this category, it potentially becomes an exercise of examining how to attempt to get the best return for an "investment" (albeit a forced one) from all the years of Social Security related payroll deductions.
Post: Rethinking the “Right” Time for Social Security
Link to comment from April 24, 2026
Keying of Dick Quinn's standing view that Social Security is a form of insurance; I believe this view would be shared by Franklin Delano Roosevelt (FDR) if he were able to add comment here. In any case, why not transition the S.S. system into something akin to true insurance? When you take out and pay into a home owner or auto insurance policy you don't get a guaranteed annual payment from these policies (other than small periodic dividend checks from mutual policies). Could you imagine the even higher cost of insurance if we all got some form of regular diluted income from these policies? a) While I do support "keeping the promise" for those who have already started drawing benefits or at least passed or approaching their their FRA; some phase down or "freeze" of benefits seems in order for those who are years away from retirement and do not need the "insurance" of a monthly check from Uncle Sam in retirement. For those paying into the system already but years away from retirement this would be akin to the "freezing" of pensions many of us (non-government workers) experienced in our careers during the transition to 401Ks. As has been suggested here by other writers, some of the funds after the "freeze" could be invested in he stock market to fill the gap on the "promise" for those who started paying in but are years away from retirement. b) Thereafter, anyone entering the work force would be truly on an "insurance" basis-only receiving benefits on a needs basis after retirement and or if experiencing a life crisis earlier in life as is customarily covered by the "insurance of S.S. today. c) To be clear, everyone earning wages would have to pay into the S.S. "insurance" pool as everyone could at some point in their life need the "insurance" plus it's the right thing to do. d) All that said, instead of continuing to figure out how to grow S.S. and tax more, perhaps the focus should be on paying out less or none to people who will not need it in future years while still providing the "safety net" that FDR envisioned. e) There also seems to be a psychological issue surrounding S.S. that needs a major shift. Presently it is something people look forward too and tend to lean on /overestimate the future benefit of as they make financial choices in pre- retirement life. Seemingly all too often they are disappointed after starting to collect S.S. then complain it's "not enough". In a true "insurance" paradigm, it really should be thought of as "I sure hope I never need this but it's there if all does not go as planned". The noisy S.S. tax debate will decrease in volume-to some degree at least- when the system is not facing perpetual guaranteed payouts for all.
Post: Fixing Social Security once and for all
Link to comment from April 19, 2026
Thank you, James.
Post: Social Security Survivor Benefits for Spouses
Link to comment from April 18, 2026
AMEN, Dick. Social Security is not welfare.
Post: Fixing Social Security once and for all
Link to comment from April 18, 2026
Great article Rick. This really resonated with me as a fellow career-long alum of the Aerospace Industry over a virtually identical time frame (I also started with GE in the fall of 1985). The "family tree" of the Aerospace/Airline industries is a history buff's dream to study but for the people working in the industry, a challenge at times. I gained great admiration for the factory workers on aircraft assembly lines during my early days in the late 1980s while working in Southern California. They would move from employer to employer depending who had the latest government contract. As best I understood it at the time, there was very little pension accrual happening with all those moves and portable 401K's were not yet mainstream. On the flip side, a relative of mine stayed put at the same aerospace component company for his entire career, survived approximately five acquisitions and finally opted for a severance package during acquisition number six into retirement. Not bad. I sometimes wondered why I was "still" in that industry as the years went by. In retrospect, if I could rewind time, I'd do it all over again. It was never boring and at times if anything, just a little bit too exciting.
Post: Navigating a Turbulent Career
Link to comment from April 18, 2026
James, another great article. Please confirm my understanding of the following: in a case very similar to what Linda describes below BUT the spouse who died had NOT started claiming Social Security yet, and the younger, surviving spouse is not yet claiming S.S. either: if the surviving spouse claims S.S. a bit early at 65 {while waiting for her FRA (67) to claim the higher survivor benefit}....here is the question: she can only claim her own S.S. and is NOT eligible for the potentially higher spousal benefit because the higher earning spouse has passed away. Correct?
Post: Social Security Survivor Benefits for Spouses
Link to comment from April 17, 2026
Dan, I agree that the 6.2% rate has been too low and as Dick references evidently 6% of the workforce earn above the cap above which the tax is no longer deducted. I was "fortunate" to be in that 6% for most of my career. For years it has never made sense to me that when I reach 70 (I still have a few years to go) the stressed Social Security (S.S.) system is going to send me a "check" each month. As I have referenced in these pages before, my view of S.S. when I was young was pessimism (that I'd ever see any S.S.)- followed by indifference/mixed feelings as to why I should ever receive anything - to now as I approach 70, derision. I plan to either donate my S.S. proceeds (if I ever receive them) or use them to stuff grandchildren's 529's and or "Trump Accounts". With all this said, while it won't entirely fix the S.S. system's many shortcomings; there ought to be a win/win path for higher income people to pay their fair share to support the system for those who NEED it then have a reasonable path to opt out of ever receiving benefits. "Win/win" might mean that the "cap" is replaced with a "threshold" above which the 6.2% (or prevailing %) of an individuals income is contributed to a mandatory Total Market Index Fund in a de-facto IRA account of sorts. If a person participating in this program waits until 70 they would have the irrevocable option of either collecting S.S. albeit predicated on a higher level than the current "cap" since they contributed more *or* opt out of S.S. benefits entirely and revert to having access to their Total Market Index de-facto IRA which they can then invest as they see fit. They would then pay capital gain tax on any withdrawals, the proceeds of which would flow into the Social Security Administration. Note: if they for whatever reason opt to collect traditional S.S., they forfeit the IRA and the proceeds move into the Social Security Administration coffers. In summary:
Post: Fixing Social Security once and for all
Link to comment from April 16, 2026
On a positive note, I have observed quite a few people who never had the interest, nor spent the time, truly mastering moderate- to high-level retirement planning. Their interests were in other areas. That said, they lived/do live financially conservative lives and never had outsized expectations of what Social Security was supposed to provide on a relative basis. Many, but not all, of whom I speak were old enough to have actually lived through—and were historical observers of—the period of time when Social Security was established. On average, I would say these people were/are some of the happiest people I have known. Without ever reading, or perhaps even knowing about, Bogle, they found their own version of “Enough.” I think these people don't get enough "press," but in a way, I have always admired them. On the less positive side, two thoughts come to mind:
Post: “We did everything right.” Maybe not. Retirement income should not be an unpleasant surprise.
Link to comment from April 12, 2026
James, this well written piece provided another HD "knowledge nugget" for me. I somehow missed the "50% Rule" while researching the Social Security (S.S.) landscape for my spouse/family information document in the event of my demise or becoming incapable of navigating all this. While it would only benefit us for a short time (assuming I make it to 70 when I plan to start SS); it is very nice to have the information. My long standing general pessimism and indifference toward S.S.does not diminish my desire to understand the details. Thank You
Post: Social Security Spousal Benefits
Link to comment from March 30, 2026