Letter to the Editor ¦ February 11, 1998
Double-Income, Four Parents

By David Langer

The more accurate headline for Alan Murray's Jan. 12 page-one Outlook column is "Boomers Would Like Social Security 'Return' If Calculated Correctly" rather than "Boomers May Not Like Social Security 'Return.'" The computation of the return is typically and incorrectly done on a simplistic savings-account basis, which disregards the saving to workers generated by Social Security due to the reduction in financial responsibilities to needy relatives.

For example, the annual Social Security tax for Mr. Murray's 30-year-old couple who both work comes to perhaps $4,000. They have up to four surviving parents who are or will be retired and receiving annual Social Security benefits of perhaps $13,000 singly or $20,000 as a couple, enabling them to live without calling on the couple for assistance.

If the couple therefore pays $140,000 in Social Security taxes in the next 35 years, but Social Security spares them having to contribute say $8,000 a year to support their parents for about 20 years, then they will have a net profit when they reach age 65, and they will then begin to receive their own Social Security income of perhaps $20,000. The potential return for many workers can thus be much greater than the 1.4% or 5% reported by Mr. Murray.

David Langer
Actuary Consultant

- David Langer, a consulting actuary and president of David Langer Co., Inc.
New York

World's Biggest Ponzi Scheme ¦ Letter by John McManus, The Wall Street Journal, February 23, 1998

Ponzi Wouldn't Bother With Social Security ¦ Letter by David Langer, The Wall Street Journal, March 13, 1998