Question: Here’s a question that’s been eating at me. Why does our government keep our unused Social Security after someone’s death rather than paying the unused balance back to the spouse? The government didn’t contribute to our Social Security insurance, so why should they have the right to keep it? I think of all the people who either never drew a dime of it or those who drew but still left an enormous amount.
Answer: Social Security is a longevity insurance pool that pays out to those who live very long from those who die early. If, for example, you make it to 100, others who died young will, in effect, be paying for the extra benefits you’ll receive for living so long. So you too may benefit from this system.
This said, the system is enormously unfair when considered on an actuarial basis, by which I mean on the basis of what people will receive on average. Why, for example, should a spouse who works not a day in his life receive a higher benefit than someone who worked every day of his life? No idea, but that’s exactly what can happen under our system.
Also, why should those who read this column end up receiving higher lifetime benefits than those who don’t? Why is the system designed such that the size of one’s lifetime benefits depends on making exactly the right moves at exactly the right time? The system as currently designed is an absolute scandal.
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