Social Security: The readers speak

Allan Sloan with his Social Security card. No, that's not his real number. It's not his real signature either.

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NEW YORK (Fortune) -- I was snowed under by e-mail from readers of the Social Security article I wrote last month, which appeared online just as I was starting my vacation and in print a few days later.

I didn't have access to reader e-mail at the beach, and I've just now caught up with all my Social Security mail. I would like to share some of that correspondence with you.

Before we get to specific letters, I'd like to answer three questions asked by many writers. They involve illegal immigrants, Social Security bookkeeping -- and my picture.

Immigrants first. Social Security has big problems, which was the point of my article, and readers wanted to know how much of that is attributable to illegal residents' getting benefits.

The answer is, little or nothing. Here's why. If you're an illegal resident and get a legitimate Social Security number, and work long enough to qualify for benefits, you can collect if you move outside the United States. (However, you can't collect if you stay here, under Social Security rules.)

But paying those benefits -- which illegal immigrants have earned by paying Social Security taxes, along with their employers -- is the same as paying a legal resident who has similar payment history. Social Security is an earned benefit -- it's not like Medicaid or welfare -- and those who have paid into the system, whether or not they're here legally, have earned it.

If you're an illegal immigrant with a phony Social Security number, you're helping Social Security, because you and your employer pay into the system but you don't get any benefits from it. The money is credited to a "no-match" account at the Social Security Administration.

And please, don't deluge me with mail about illegal workers. I'm not taking a position on the broader issue of immigration, I'm simply answering a legitimate question about its impact on Social Security, which seems to be negligible.

Now for bookkeeping. Many people suggested that the federal income taxes that higher-income recipients pay on their Social Security benefits should be credited to the Social Security trust fund. In fact, they already are.

And, finally, the picture that ran with the article shows my real Social Security card, but not my real Social Security number. It's a null number that Social Security gave me to use. It's not my real signature, either. Fortune's photo wizards deleted the signature I scrawled when I was 16 and substituted "Allan H. Sloan" written by one of my associates, whose handwriting is better than mine was or ever will be.

Now, to a few readers' letters, edited for brevity and clarity. I have not verified my correspondents' names or identities, which is why I'm using only initials of the names they signed with.

I was a bit disappointed that it wasn't until your 12th paragraph that you finally called Social Security what it really is -- an intergenerational social-insurance plan. Too many Americans think that it is their retirement or their pension plan. Social Security was not meant to be someone's source of income in retirement, yet seven decades later more than half of retired Americans are essentially wards of the state, relying on the government for the majority of their income. In my book that's a program failure, not a program success. -- M.M.

An interesting point of view. Thanks for sharing it.

I don't understand the difference between my buying a Treasury security and the Social Security Administration buying one. Aren't they both IOUs? -- J.S.

Yes. However, owning a Treasury represents savings for you, but not for the Social Security trust fund. That's because having one arm of the government (Social Security) owning IOUs from another arm of the government (the Treasury) doesn't help the government as a whole cover the cash shortfall that will start when Social Security takes in less cash than it spends. The government will have to borrow the money to pay off the trust-fund securities so Social Security can pay benefits. It's the same amount it would borrow if there were no trust fund.

I enjoyed your article except when I got to your proposal of raising the retirement age to 70. I retired early this year at age 64, and let me tell you, there is no way I could have hung on to age 70 doing my job well, and I'm not a manual laborer. There is something about mid- and late-60s that makes it very difficult to continue working mentally and physically. The body starts breaking down and the mind slows down. Maybe you are an exception. -- S.H.

Would that I were -- at 64, I'm definitely getting creaky. But we have to do some painful things to make Social Security financially secure, and raising the retirement age for white-collar workers is one of them.

Nothing short of economic collapse will educate these congressional fools and the ignorant American "sheeple" who elected them. -- T.M.

Knowing the politicians here in Washington and their penchant for demagoguery on the issue (especially liberal Democrats), I doubt anything will be done anytime soon. -- D.E.

I hope you're both wrong. Then again -- shhh, don't tell anyone! -- most veteran journalists like me are romantics at heart, and think that if we help people understand what's really going on, the world can be made better.