Every year the Social Security Administration sends out a statement guesstimating my retirement and other benefits, and every year I shrug and drop it into one of the black holes that surround my desk. Similarly, I pay little attention to the annual statement from the managers of my 401(k), except to take note of the overall rate of return and to make sure it is far better than the corporate average at 42nd and Treadmill. For the past few years, this has been a piece of cake the dot-com meltdown of 2000 and the recession of 2001 have played hell with most portfolios, while I, hedged not quite to the point of immobility, have essentially broken even. (For 2000, I scored a gain of 1.67 percent; for 2001, I took a 0.79-percent loss. By almost any standards this is a wash.)
Then again, that big number 2 in front of the year has a way of concentrating the mind, especially when my Official Retirement Date, which the SSA says comes in 2019, is no longer in the Next Freaking Century. Seventeen years away! I've been online for seventeen years, taking time out for meals of course, so the distance is actually graspable, the horizon almost within reach.
Or is it? Well before 2019, Social Security is supposed to start running a deficit, and the trust funds are expected to be exhausted some time in the 2030s. About four years ago, I made some noise about how it might be a wise move to privatize at least some part of the system, a notion that not everyone within the Beltway is inclined to embrace just yet. I'm not counting on it happening on a large scale any time soon, either. But assuming Social Security survives in something resembling its present form, the most recent SSA statement says that in 2019 I can draw a monthly sum equal to approximately 76 percent of my current take-home pay, which says to me that either the system is in better shape than I think it is, or I am grossly underpaid. Maybe both.
That 401(k) isn't likely to contribute a whole lot, either: based on long-term return rates, and assuming my current contribution rate holds up (it is presently six percent), I'll be hard-pressed to get this account very far into six figures in the next seventeen years. Of course, this will matter very little if I drop dead at age 69. And it won't matter at all if I drop dead at age 49, but that's another story.
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Copyright © 2002 by Charles G. Hill