DALLAS -- A couple of tips, friends, on the Social Security issue, one tactical, one strategic:
If you are about to turn 65 and go for the benefits side of the system, save yourself a lot of time -- call Social Security (800-772-1213) first and get an appointment.
Get there a bit early. When I went in, a nice lady, a claims officer, came out and called my name about a quarter 'til. I was waiting out in the car, but when I came in, the weary folks waiting it out without an appointment told me she had just called my name.
They, bless their hearts, illustrate why you should have an appointment.
After your claims officer sets you up and gets the ball rolling, she gives you her phone number.
Thereafter, you deal with the person who has your data and knows your case. So, unlike most corporate canned-people phone interfaces, you don't have to repeat your entire life story every time you ask about your case or push a dozen buttons before you get a human. What a concept!
That is the tactical tip and comes from my own experience. The strategic tip is drawn from a macroeconomic source, the Employee Benefit Research Institute, a think tank of high repute. The head man, Dallas L. Salisbury, and co-author Kelly Olsen have published a briefing paper that should be required reading for every American involved with Social Security, either on the tax side or the benefits side.
The major findings of the institute's analysis should make you take a new look at drastic "reform" plans that would fix Social Security by killing it -- by replacing current credit-based accounts with cash-based individual accounts.
First, replacing the current system entirely with cash-based individual accounts "could be the largest undertaking in the history of the U.S. financial market, and no system to date has the capacity to administer such a system," declares the institute's brief.
The promoters of the "junk Social-Security" line say setting up 148 million individual, cash-based accounts would be easy, like private plans, just bigger. That is "tenuous at best," says the institute. Social Security covers millions of workers and small businesses that don't have pension plans. And cash-based plans, which must account for every penny, are much more complicated and expensive to administer than the comparatively NTC simple Social Security system. Who would pay the costs of administering such a plan? You got it.
Conservatives like the individual accounts because they believe having money in their own names would make more voters take a conservative line. But why not try a toe in the water rather than an all-or-nothing belly buster? Like New York Democratic Sen. Daniel Patrick Moynihan's pilot plan to let individuals take a small share of their tax and invest it.
Private investments, over time and the whole market, average higher yields than Social Security's bonds. Media liberals often set up models showing how much more mutual fund investments would pay than boring old Social Security.
Only a small minority of the real-world work force, the institute says, even claim to know how to make such winning investments: "More than half of all Americans do not know the difference between a stock and a bond, and 16 percent say they have a clear idea of what an individual retirement account is."
The education process for bringing everybody up to speed on the basic skills of investing will take time and billions. Most folks don't understand the basics of even the privatized retirement plans we already have.
One of the brightest people I know recently explained to me that he can't have an individual retirement account because he works for a company with a pension plan, and besides, he concluded, "I have a 401(k)." Both assertions are incorrect -- neither condition rules out an IRA.
The strategic tip is this: Social Security works. We'd better not kill it until we have a replacement that we are sure will work as well for everybody. The Employee Benefit Research Institute hasn't spotted one yet; neither have I.
Jim Wright is senior columnist for the Dallas Morning News.
Pub Date: 12/10/98