(FORTUNE Magazine) – We have been following the latest big issue to agitate the country's senior citizens -- the issue being who should finance the cost of their catastrophic medical coverage -- and have a forecast about the next big issue. First, however, it should be said for the record that your correspondent was not among the decrepit demonstrators on Chicago's North Side who were observed chasing Dan Rostenkowski around the block, jumping on the hood of the Congressman's limo, and generally looking like a lynch mob. Friends, we were in New York that whole day and can prove it. Why were the ancients picking on Rosty? Because as chairman of the House Ways and Means Committee, he was inevitably a symbol of tax-law change, and they were furious about the latest change -- the Medicare Catastrophic Coverage Act, passed a year ago to universal acclaim. Ever sensitive to shifts in opinion, especially when accompanied by necktie parties, Congress is now rushing to repeal this law. America's old folks obviously did a double take on the law. Many of them concluded that they ought to get the catastrophic coverage free (instead of having to pay the annual tax of up to $800 per senior). But another reason for the protest was a widening realization that catastrophic coverage was already available in the private sector -- and that millions of seniors were already | covered by corporate or other private insurance plans. Which brings us to the forecast: The senescentia, or at least a significant minority of same, will soon discover that a similar logic pervades Social Security retirement payments. We cannot be the only old-timer on the block to figure out how bad the pension deal has been. Observing that seniorhood was rapidly closing in, we recently obtained from the Social Security Administration certain detailed data on our own personal role in the system. Specifically, we got figures on the taxes ''contributed'' during a lifetime of editorial labor and the pension that would be received on certain assumptions about future earnings. On a surface inspection, the figures seemed quite heartening. We have always been employed at or above the maximum taxable level -- which was $3,600 back in 1951 and is $48,000 today. A consequence of this record, matched by millions of corporate employees, is that over the years we have paid $34,095 in Social Security taxes (as of the end of 1988). If we now retired, our pension would be $895 per month; if we continued working through age 70, it would rise to $1,110 in 1988 dollars. It all sounds like a superior return on those contributions. But, of course, the return will be paid in cheap modern dollars while the taxes were paid in dear past dollars. Our $34,095 of contributions were in fact worth $56,264 in 1988 dollars. But that still understates the taxes paid. Most economists will tell you that the employee also bears the cost of the employer's matching contribution (which would be available for wage and fringe benefits if there were no Social Security tax). So the $56,264 turns out to be really $112,528 contributed to the system. By one critical measure, even this figure is too low. Our ultimate question, after all, is about the amount that would be available to buy a private annuity today if all those contributions had been saved for this purpose. Let us say that these savings were earning interest at the real (i.e., after adjusting for inflation) rate paid by government bonds -- an estimated 3% in the period in question. Applying this rate to our tax data, we learn that a solid $172,690 would now be available for the annuity. At present interest- rate levels, that sum would enable a 65-year-old man to buy a lifetime annuity of perhaps $19,000 a year -- some 75% better than our Social Security pension. Okay, okay. We admittedly walked past a number of complications in this analysis. (One concerns spousal benefits.) We also admit to not being surprised by evidence that Social Security has a large redistributive function. The undersize payments to well-off corporate employees are, of course, an offset against the huge payments -- i.e., huge in relation to their tax contributions -- received by the poor. Most middle-class old folks presumably know all this, and doubtless most approve of a certain amount of redistribution. Still, we suspect that not many of the Americans who have paid the maximum tax over the years know what a rotten deal Social Security has been for them. If we were in Congress, we would not be wild to spill the beans to these codgers. Some of them are said to be dangerous.