THE BLOG
09/14/2011 02:20 pm ET Updated Nov 14, 2011

Social Security: Better Than Nothing but Less Than Ideal

Last year, realizing that any of us could die anytime, I made the decision to apply early for Social Security, as the Social Security Administration says, before "DRA" -- Date of Retirement Age. For sixties people, DRA is 66. For those following, it's 67 -- and if the Super Committee wields the axe, it could well be 69 or 70 for people now in their 30s and 40s. I didn't do this with the intention of retiring, but rather to have a safety net as I grow my consulting business at home and overseas. So far I've been paying for it entirely out of pocket. The extra money could ensure that my partner and I don't slip into poverty while we work out what has been so far been a moderately expensive, self-funded business in start-up mode.

If the business caught fire next year, my payments would be severely reduced and I would pay taxes on the pauce remainder -- which I would do gladly. With determination and luck, we might even be do some hiring ourselves, doing our part to end this deadening recession.

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So I applied online and in a few weeks received a letter saying I was eligible. However, no check arrived four months later, as promised. Nor during the next month, either, or the one after that. I vowed to find out why.

After two phone calls to a national number and a visit to our local SSA office -- each of which produced a different reason why I was not receiving checks, and another theory how to fix things -- I finally learned from phone call three, this time to our local office, that because I am self-employed, I am a suspicious character. I might be receiving benefits I don't need. I might be spending them unwisely or not in accord with the SSA's charter.

Or worse of all, I might be a SS "cheat," not reporting a huge income (not hardly) in order to collect (a very modest) SS check each month. Yes, I might be plotting against the U.S. and more importantly, the SSA! I was asked to hand over my last three tax returns -- remarkably, the SSA has trouble getting them from the IRS, even though the IRS uses my SS number to file my taxes, ostensibly to make them easy for the SS to access. Bureaucracy.

In the course of a very uncomfortable phone call, I learned that if I earn more than $1,200 or work over 45 hours in a month it could disqualify me from receiving benefits -- even if the "extra" work is unpaid. For me to be eligible, there has to be a substantial "change in conditions" of my work. If I estimated working 10 hours a week doing paid labor that earned me at most $300 and, say, another 15 hours a week without pay marketing my availability, traveling to conferences, reading up on new developments in my field, or trying to arrange engagements for next year -- as any entrepreneur knows, an impossibly low time commitment -- that's not change enough. I might very well be ineligible for Social Security even though my actual income remained below the $14,000+ limit and most of my work was for free. I find this incomprehensible.

I always thought that Social Security's purpose was to provide for our well-being in our elder years -- paying us back our own contributions -- not to make reentering the job force impossible, forcing us to retire! I knew I wouldn't earn any interest on my payroll-tax "investment" -- the U.S. Government got to spend that -- but at least I'd get it back. Now I find out that I might not even be able to collect the principal until I'm totally broke or I'm 67 and the iron is no longer hot. Others have had similar experiences, many, many others. There is a whole court system set up just to handle appeals of SS determinations.

There is another alternative, and that is to receive a lot of capital gains on stocks, bonds, and other investments, as the 2 percent do. Coupon cutters, people who get dividends in the mail each month, or who collect huge rents are not held to a cap on income and are free to spend as much time as they like talking business with their cronies, ordering new predations on working people and the poor, and generally having a jolly good time. They even get to receive SS payments, same as me. This double-standard is one reason the Koch Brothers can involve themselves in making so much terribly destructive mischief without running afoul of the law.

A trip to the local SS office, a drab office with linoleum floors from the 50s, where people are verbally frisked on entering and then get to talk to agents through windows (without thick glass dividers, however) was revealing. Presumably because of the many rules and regulations they are called upon to enforce, Social Security representatives there, though sympathetic, ultimately are compelled to treat their clients as prospective criminals and "welfare cheats." Is this what FDR intended?

The SS law as written 80 years ago needs serious revising. I don't mean cutting benefits, raising the age of eligibility, or wiping out the safety net. I mean making it relevant to our times.

I find the private pension plans common in "socialist" Scandinavia far preferable to SS. Every company and agency contracts with a pension fund to serve its workers; accumulations are transferable from fund to fund when you change employers. The pension funds are tightly regulated, invest responsibly (often in green and progressive projects), and are totally transparent. They encourage workers to look in on their operations and ask them to offer ideas on how to better invest their earnings. Like a Credit Union.

Deductions from earnings are automatic and are added to by employers. You earn a relatively high interest rate on your deposits, a number negotiated between labor and management. You get regular reports on your accumulating income just as you would from a savings trust and you can sit in on management meetings. If you retire at 55, your money with interest is yours -- or you can delay retiring and earn more. It's there when you want it, no questions asked. Take a vacation. See the world. Fix the house. Go back to school. Volunteer. Be politically active. Treat your grandchildren to a special gift. (Their education and healthcare are already taken care of, so be creative!)

Of course, quality employment in Scandinavia is almost universal: everyone is employed and can pay regularly into their funds -- not as in the U.S., where when you're fired due to the economy or age (as tens of millions have been recently), you stop paying into SS. And there are very, very few financial criminals in Scandinavia to come between your money and you. Financial criminals in the Nordic nations are punished worse than all other criminals except murderers and rapists, on a par with abusers which is what they are.

I was a staunch champion of Social Security until (a) I traveled overseas to see how old-age support is done there and (b) I had to deal with our own Social Security system -- ungainly, unresponsive, and cranky. Now I'm thinking twice about it. I wouldn't want those crooks on Wall Street to be cozying up to my money, but I wouldn't mind if my trusty Credit Union and other institutions like it could create funds that associated themselves with workers' careers and earnings. The current crop of Republicans... well, they're definitely not the ones to trust with such a transition. And neither are the Democrats, who are running for reelection on preserving a miserable status quo. We're stuck with what we have for lack of original thinking.

Maybe after all the nuttiness is over and courageous people are once more leading the nation, we can move in the Scandinavian direction -- if not in time for those of us in our last quadrants, at least for those coming behind. What we have now is not the best of all possible worlds. We need genuinely new thinking about old age for a better future. About that and everything else. Here's hoping we all don't die before it happens.