In another life, while a resident of the Southwest, I had an acquaintance who, to be gracious, was several sandwiches shy of the proverbial picnic.

His antics sometimes made the stunts seen on NBC's hit show "Fear Factor" look like high tea at the Waldorf-Astoria.

As an example, he once challenged me to a shooting contest in a swimming pool -- the catch was we were each other's targets.

I wisely passed. But as incredible as it seems, he eventually found an opponent and, as I recall, each escaped with only surface wounds.

One day he also did something that was at once crazy, but remarkably clever in the fact that it drilled home a cogent point.

He barged into the headquarters of what was then called the Salt River Project -- the power supplier to the greater Phoenix area -- and demanded to know where his office was.

When the woman behind the desk claimed ignorance, he calmly explained that after years of paying what he considered exorbitant utility bills, he assessed that he now owned at least part of the power consortium.

Needless to say, his brazen stance earned him several free nights of room and board courtesy of the city. I should also mention that he never got his office.  But I never forgot that episode, because underneath nearly all of us have felt that way at one time toward a monopoly.

For me it's the Social Security Administration.

Each year when I get my statement, I cringe at how much I've paid in taxes into this rapidly disintegrating system. My prospect for actually collecting anything when I come of age, or at stages when the 77 million Baby Boomers begin to retire, is about on par with my former friend's chances of landing the corner office.

And while I agree with President Bush's call to reform what is inarguably an unmanageable tax code, his call to privatize Social Security is cause for a cranial MRI.

As part of his campaign promise to create an "ownership society," the president has frequently proposed creating personal retirement accounts, which in theory would give people the freedom to decide how to invest their payroll taxes.

One such proposal would allow folks to invest up to $1,000 per year in a personal account.  The rest of their respective payroll taxes would be deposited into the current Social Security fund.

However, opponents claim that exposing accounts to market fluctuations could potentially obliterate retirement monies.

And they make a fair point. What would have happened under this system when the tech bubble burst? But let's look at facts.

When our Social Security taxes are taken out, they go to a fund, which is paying current retirees. No surprise there. Now there's still money in said fund, because we haven't yet felt full brunt of the impending demographic shift.

In 1950 the worker-to-beneficiary ratio was 16-1. Today it is 3.3-to-1. If it keeps falling, you don't have to be a CPA to discern that there will not be enough workers to pay benefits.

But any privatization plan also carries massive baggage in the form of transitional costs -- the inevitable gap between worker contributions and retiree benefits that will happen as portions of worker payroll taxes now go into private accounts.

Depending on who you believe, the price tag for those transitional costs is estimated to be in the neighborhood of $1 trillion to $2 trillion.

Now, as I see it, future retirees have two choices. Either fix the current system, which would also be prohibitively expensive, or invest the money in private accounts.

Either way, no citizen is going to get an office at the SSA, but trust me, they will eventually pay -- a lot -- and live with the possibility of getting nothing in return.

Register or login for access to this item and much more

All Accounting Today content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access