Hey Big Govt. - Please Invest My Social Security in Real Estate!

9 Replies

This post is admittedly as much about venting as it is looking for opinions of others. Here's what crossed my mind this morning: Social Security. I'm turning 49 this year and have been working (on the books) since age 15. In general, I've assumed for the past 20 years that the Social Security Administration would be bankrupt by the time I retire (hence the passion for real estate!)  

I went to the SSA site and did some quick math using their estimators. Turns out that to date I've contributed about $196K to SSA over the years; if I work at my same pace (W2 job), I will contribute another $188K over the next 19 years and retire at age 67.  Given this, I would have to live to age 77 to even get back the money I put in (at roughly $3,100/month). Conversely, if I just STOPPED working (according to SSA estimates) and waited till age 62 for early retirement, I would get $1,700 for 9 yrs, 8 months before I got back money I contributed. So starting at age 71, I would be getting $1,700/month (and finally collecting my return!) Under this hypothetical, I would also have kept about $10K/year for myself to invest over those 20+ years.

Funny math!  Hmmm...now how to get off the books without stealing someone's identity?

So, I definitely have incentive to STOP WORKING NOW, in terms of my Social Security dividends - or at least stop contributing now to that fund! HAHA!

Reading this was even better: "The Social Security trust funds are invested entirely in U.S. Treasury securities. Like the Treasury bills, notes, and bonds purchased by private investors around the world, the Treasury securities that the trust funds hold are backed by the full faith and credit of the U.S. government."   ...full faith and (endless) credit of the U.S. government...

Can someone please point the Treasury Department to BP forum?  Please (Social Security Admin.) put my money in self-storage units! (Also, my Dad worked from ages 16-to-64 then died without collecting, so he told me you could take his contributions and put them in self-storage units as well!)

Any legitimate Social Security strategies beyond my cynicism?  @Thomas Rutkowski , can you please help the Treasury Dept. out?

I find federal government program names ironic.  Often they do the opposite of what their name implies.

"Social Security" is definitely one.  It provides very little financial support and, unfortunately, encourages many to ignore funding a retirement, thus creating social insecurity.

Are you aware of what you are saying?  You want the government to invest in RE to try and turn a profit? 😂🤣😂

While I am neither a big fan of our federal government or how my social security money is invested...I would like to raise a few counter points

- SS also has disability components to it

- SS was never meant to be your only retirement plan, it was meant to provide a base and be part of three prong approach of SS, pension and 401k/individual savings

- SS was meant to provide base level of income 

The bigger problem for me is companies have removed pensions and lowered 401k contributions while life expectancies have greatly increased making SS possibly insolvent in the near future.  The government failure to identify these changes and adjust the SS accordingly is where I have an issue

Your suggestion about investing your SS in real estate while interesting is not really practical.  I have often had similar thought...if only I could invest my Employers and my contributions into stock market and earn 8%....how much money would I have.

If this would be allowed, who would pay for the disability insurance part of SS.  What happens when you invest in stock or real estate deal that goes bankrupt and now u have nothing.  Where is the safety net?

I definitely think the money should be invested more aggressively as it is a LT strategy.  But I don’t think people should be able to direct their own investments as someone needs to protect people from doing stupid stuff. 

Finally, we should look at increasing employers contributions to make up for the reduction in 401k contributions and pensions.  Also, need to either adjust retirement ages or payouts as the system was implemented when people were living 5-10 years in retirement.  Now people are looking at a retirement of 30yrs 

just some thoughts

I have many clients who assume SS will go bankrupt and will not be around when they are ready to retire. I do not find this to be realistic for several reasons:

1. While the program will go insolvent in about a decade on the current trajectory, there are several things that can be done to change that (raising the min age to collect, reduce benefits, increase SS taxes - to name a few.)

2. Our government is notoriously bad at un-doing programs. Even the really bad ones stick around for decades after their usefulness has long gone.

3. Even if our government was willing to undo SS, there are millions of Americans dependent on the program - and they VOTE. (Meaning they'd vote out any government trying to undo the program.)

Making personal financial plans for no SS is a personal choice, but I urge my clients to not take such an ultra-conservative approach. If you plan to not have SS and then you get it, that's a nice problem to have.  But it's still a problem - because you likely under-lived the prior 4 decades over-saving money out of fear that SS was going away.  You could have used that money to get a house where your kids didn't have to share a room, a car that didn't break down quite so much, or taken a few memory-building vacations with your family.

Planning on 50%-75% of what the SSA says you will be getting is a much saner way to go, IMO. It factors in the realities of the day without over reacting and over compensating.

Best of Luck with your Real Estate Investing!

Originally posted by @Jim Froehlich :

This post is admittedly as much about venting as it is looking for opinions of others. Here's what crossed my mind this morning: Social Security. I'm turning 49 this year and have been working (on the books) since age 15. In general, I've assumed for the past 20 years that the Social Security Administration would be bankrupt by the time I retire (hence the passion for real estate!)  

I went to the SSA site and did some quick math using their estimators. Turns out that to date I've contributed about $196K to SSA over the years; if I work at my same pace (W2 job), I will contribute another $188K over the next 19 years and retire at age 67.  Given this, I would have to live to age 77 to even get back the money I put in (at roughly $3,100/month). Conversely, if I just STOPPED working (according to SSA estimates) and waited till age 62 for early retirement, I would get $1,700 for 9 yrs, 8 months before I got back money I contributed. So starting at age 71, I would be getting $1,700/month (and finally collecting my return!) Under this hypothetical, I would also have kept about $10K/year for myself to invest over those 20+ years.

Funny math!  Hmmm...now how to get off the books without stealing someone's identity?

So, I definitely have incentive to STOP WORKING NOW, in terms of my Social Security dividends - or at least stop contributing now to that fund! HAHA!

Reading this was even better: "The Social Security trust funds are invested entirely in U.S. Treasury securities. Like the Treasury bills, notes, and bonds purchased by private investors around the world, the Treasury securities that the trust funds hold are backed by the full faith and credit of the U.S. government."   ...full faith and (endless) credit of the U.S. government...

Can someone please point the Treasury Department to BP forum?  Please (Social Security Admin.) put my money in self-storage units! (Also, my Dad worked from ages 16-to-64 then died without collecting, so he told me you could take his contributions and put them in self-storage units as well!)

Any legitimate Social Security strategies beyond my cynicism?  @Thomas Rutkowski, can you please help the Treasury Dept. out?

 I don't think that would turn out well. When YOU invest in real estate, you are investing your own money to generate a return for yourself. So YOU care very much about the deal and the numbers. You are incented to find the best deal possible. If the government were investing in real estate, they would be investing with other people's money. Price and quality would not matter to them. They have no incentive to find the best deal possible. 

Just look at health care. You have government bureaucrats spending other peoples money. Healthcare today sucks more than ever and it is more expensive than ever. College loan meddling has driven up the price of education to match the funding available for it.

I would expect the same with real estate.

@Kris L. , @Randy Bloch , @Paul Allen , and @Thomas Rutkowski , thanks for adding your thoughts to the table! I have read a few books on the history of Social Security in the past and appreciate the different viewpoints of the predicament (or safety net), depending on your view that we find ourselves in.  In my view, the moment after 1935 when money was taken from SS fund to use for other budget items, is the moment it became a vote-grabbing, money-sucking Ponzi scheme! Of course, if and when it ever becomes my turn to go to the trough and collect my share of what's left, I'm sure I'll be grateful to have it. (and am very grateful as family systems and support structures continue to break down, that elderly and disabled people are not left with nothing except charities), which historically (especially faith-based) closed the gaps where families couldn't take care of themselves.

@Randy Bloch, the only thing I sharply disagree with you on, just based on my belief system is:

"...But I don’t think people should be able to direct their own investments as someone needs to protect people from doing stupid stuff."

I don't think people need the Govt. (on any level) to protect them from themselves. That's why I still have the right to NOT wear my seat belt here in New Hampshire or NOT wear a helmet...as long as the harm done is to MYSELF, then I certainly don't need any Govt. telling me what to do!  "Live Free or Die" (and likely so without a helmet or seat belt on!) 

...on a related subject, this is kind of why I was irked when I discovered the SEC law (1934) meant to "protect" all the poor idiotic people (meaning anyone not in top 1%) from investing in "shares" of real estate...based on knee-jerk reaction to Crash of 1929 (infamous widows, poor people, etc.).  Again, and ironically, it solidified the ability of the "rich to get richer" (i.e. accredited investors).  At least now with JOBS ACT of 2012, us common folk can invest $2K per year like the rich people in blind syndications!

The more I learn, the less I understand...but I find it all amusing! (As Kris Kristofferson once wrote, Freedom's just another word for nothing left to lose)

Let me clarify my statement....I am not a believer in government intervention in anything is a good idea....to someone else's point look at US healthcare and educational system.  However, if you are going to have a government program that offer some minimum level safety net for retirees and the disabled then you can't let people have 100% control of the investment choices....it is not a safety net when people can invest it something that will go to zero and the safety net disappears.

I would be very supportive of SS investment options (think diversified 401k funds or target funds) that people could choose and benefit from the increased gains. This could include real estate type options like REIT. I would not support allowing people to invest SS funds into things like personal property, SDIRA, Syndication and/or PPM. This is would not be a safety net in my opinion.

Originally posted by @Jim Froehlich :

@Kris L. , @Randy Bloch , @Paul Allen , and @Thomas Rutkowski, thanks for adding your thoughts to the table! I have read a few books on the history of Social Security in the past and appreciate the different viewpoints of the predicament (or safety net), depending on your view that we find ourselves in.  In my view, the moment after 1935 when money was taken from SS fund to use for other budget items, is the moment it became a vote-grabbing, money-sucking Ponzi scheme! Of course, if and when it ever becomes my turn to go to the trough and collect my share of what's left, I'm sure I'll be grateful to have it. (and am very grateful as family systems and support structures continue to break down, that elderly and disabled people are not left with nothing except charities), which historically (especially faith-based) closed the gaps where families couldn't take care of themselves.

@Randy Bloch, the only thing I sharply disagree with you on, just based on my belief system is:

"...But I don’t think people should be able to direct their own investments as someone needs to protect people from doing stupid stuff."

I don't think people need the Govt. (on any level) to protect them from themselves. That's why I still have the right to NOT wear my seat belt here in New Hampshire or NOT wear a helmet...as long as the harm done is to MYSELF, then I certainly don't need any Govt. telling me what to do!  "Live Free or Die" (and likely so without a helmet or seat belt on!) 

...on a related subject, this is kind of why I was irked when I discovered the SEC law (1934) meant to "protect" all the poor idiotic people (meaning anyone not in top 1%) from investing in "shares" of real estate...based on knee-jerk reaction to Crash of 1929 (infamous widows, poor people, etc.).  Again, and ironically, it solidified the ability of the "rich to get richer" (i.e. accredited investors).  At least now with JOBS ACT of 2012, us common folk can invest $2K per year like the rich people in blind syndications!

The more I learn, the less I understand...but I find it all amusing! (As Kris Kristofferson once wrote, Freedom's just another word for nothing left to lose)

 Very well said!! My thoughts exactly.