My Social Security: The Rate of Return

One of the things that I am constantly asked is what is my “return” on SS. Sure, I have written several articles about gaming SS, and whether the return is positive or negative. Without fail, those articles consider average payments and are not specific. I don’t have the specifics for others (and if I did I would not share them). I do have specifics for me and I am willing to share. I share these specifics so as not to be accused of just reporting averages.

The following table shows my current and expected return from SS. It includes:

The year – from 1968 (when I turned 17) to 2041 (when I hopefully turn 90)

The salary I made each year

The individual Old Age and Survivors Insurance (OASI) tax percentage.

The inflation index (cpi-u)

The dollar value of OASI contribution, including the employer contribution and,

The current value (cpi indexed) of the total contribution.

My SS retirement benefit and finally,

IRR is the internal rate of return. The calculated IRR is the real return; that is the return above inflation

tax %
with employer
current value
SS BenefitIRR

Caveats and Conclusions

I count as payment only contributions to the OASI. Parts of FICA also support both medicare and disability. These are separate programs and have separate benefits.

The January 2020 CPI-U is an estimate.

Payments to OASI are indexed for inflation while Payments are not. Should inflation occur in the future, the payment will also increase. The end result is that the return is calculated as a real, above inflation, return.

As is the nature of most insurance, I am currently experiencing a negative return. This will continue until 2025. My return from all funds credited to the disabilty fund is negative 100%. I funded it and received no benefit. Again, that is the nature of insurance.

I considered my spousal benefit (in 2018 and 2019). I did not consider that my wife will continue to receive an increase in her benefit after my death.

Obviously, the longer I live, the better my return. If I live to be 82 (my life expectancy when I hit age 65) my return is about 2.3% above inflation.

My total contribution to OASI is 43K. Another 43K was contributed by the employer. The total contribution indexed for inflation is 172K. Obviously I have already gotten back my contribution.

Could I have done better with a market savings account? Maybe. I could also have done worse. The SSA guarantees that there are no big winners or losers. It is, after all, insurance.

Fixing Social Security:Updated

This article was originally written in the spring of 2016.

Many suggestions to address the social Security funding shortfall can be manipulated using the SS reform tool provided at I have listed here a set of changes that impact nearly everyone a bit and funds the system entirely
Clearly, raising the taxable maximum income yield the most bang per buck. This would be in keeping with the 1982 reform that cut taxes for high incomes (the maximum marginal rate was lowered from something like 70% to 28%) while FICA withholding was increased for all (generally lower wage) workers. Now it is time for the higher wage workers to pony up. Raising the income cap to include 90% of all income is also just a return to the 1982 reform. This one change closes 31% of the gap.

Taxing “cafeteria plans” seems reasonable. Why should a person working at McDs have to pay for health care with after tax dollars but one working for McD-Douglas gets his benefits paid in such a way that he gets to buy health care with pretax dollars? The laws just allow a lot of system gaming that should be eliminated. This covers an additional 11% of the gap.

The second big gainer is raising the retirement age. The facts are people are living longer due to better living/working conditions and health care improvements. It is fair that the beneficiaries of these lifestyle enhancements bear the retirement burden. Yes working longer will be harder – but probably no harder than it was for workers to work to age 65 in the 1960s. Yes living long has its costs – but it beats the alternative. Increasing   the retirement age to 69 and indexing it to longevity after it reaches age 69 would cut the funding gap 39%.

I could see a 5% benefit cut – as long as we also guarantee a bottom (125% of poverty) benefit. That’s altruistic but I’m good for it. Most boomers have benefited phenomenally from government largess over the years. Giving back a few percent of our earned SS benefits would not be an out sized price to pay for that largess. In addition, this is one of the few cuts I propose that would have any direct impact on today’s baby boomer retirees – and today’s retirees need to contribute something to the pot. Those two changes eliminate 19% of the shortfall.

Obviously we should reduce fraud in disability claims – that’s a no brainer. That could save 5% with an additional 5% gained by Eliminating Disability coverage after age 62. Total savings for disability reforms 10%

Reducing/reforming spousal benefits would gather an additional 5% closing of the funding gap. Changing the spousal benefit would bring benefits more in line with the realities of today’s working world. Changing the ex-spousal benefits would eliminate a lot of gaming in the system.

Finally,  all SS benefits should be subject to income tax. This would have a minimal effect on lower income people (they would have little to no tax liability) and  higher income people (they are already are taxed on 85% of their benefit). Yes it would hit the middle but it would eliminate the SS tax torpedo and eliminate some gaming of the system regarding IRA and Roth IRA rollovers. It is not like the average tax rate for retirees in middle incomes is onerous today – it is not.

This plan more than accounts for the shortfall. It doesn’t severely hurt anyone that cannot afford it, and most of those impacted have benefited far more greatly over the years then these cuts would cost.


It has now been nearly 5 years – and to date there has been no attempt to bring the SS actuarial account into any kind of balance. The current expected date of severe cuts to benefits is now a mere decade or so in the future. The covid-19 pandemic is expected to worsen the problem – but it is not clear.

The Bush presidency concluded and the only effort really attempted was to start private accounts. That attempt would have accelerated the trust depletion date. The Obama presidency concluded without any effort to fix the problem. The Trump presidency also ended with zero attempts to fix the problems. An effort by John Larsen (D-CT) which raises taxes Sam Johnson (R-TX) which cuts benefits have not really gathered any following. They continue but have no real chance without a presidential push.

The impact of Covid has not really been calculated (see

It is not clear if the original social security reformer article is still useful. – it is still the latest effort put forth by the Committee for Responsible Federal Budget. The Urban Institute has looked closely at both the Larson and Johnson plan ( in December of 2020. However, there still has been no presidential push to correct the problem. Further the Urban Institute has its own bias and miscalculations ( Their misrepresentations continue today.

Great Adventures

For more than 20 years I was a serious backpacker. As such I managed to hike some pretty outrageous terrain, made some pretty long hikes, and did some things that few people have ever done. I have also taken some pretty wicked bike rides (both mountain and road), day hikes, treks, and generally just plain adventure trips. What I intend to do here is list (with short discussions) many of the long, difficult or unusual adventures that I have taken.

Over the years I have had many hiking/adventure partners. Pete Hodes and Kathy Heneghan (my wife) are deserving of special mention. Pete started me backpacking. He was a pretty constant companion for many years. I hiked with Kathy (when she was still Kathy Munch) from 1997. She continues to be my hiking companion despite giving up backpacking in 2013. Others include (but are not limited to) my brother Thomas (and his wife), Stacy Hodes (Pete’s wife) and Andy Osterhaut. No one is meant to be slighted. Great adventures often come with other people.

Himalayas and Grand Canyon

The highest mountains and one of the deepest (and probably the most beautiful) canyons in the world. I did the Grand Canyon over two trips with Kathy, Brother and his wife. I hiked Nepal with my former boss Dilip Ballal.

These trips has already been discussed in detail – see and “A Himalayan Journey” D. R. Ballal and S. P. Heneghan, University of Dayton Research Institute Informer Volume VII, Issue 12, 1997.

The Chagoopa Plateau

In 1990 I went to Sequoia NP with Brother and Pete. We attempted to cross the great western divide above Hamilton Lake but were turned back by snow. We looped back through “low country” and climbed out to Mineral King after a week to meet up with Stacey. The weather had broken and we crossed the great western divide above Franklin Lake and into the deep trench of the Kern River. Coming out of the trench several days later, we hiked about 4400 feet up to reach the “fucking” Chagoopa plateau (we can thank Stacey for the name). This was one of the hardest hikes I have ever taken. We continued the following days across Blackrock Gap and Timber Gap (both done in one day) and exited.

The John Muir Trail

During the summer of 1992 Pete and I hiked the entire John Muir Trail. We were joined for the first section by Brother and Stacey. It was Stacey, again, that named the beginning of the hike – “Stair bastard”. The last day was long (about 16 miles, 3000 feet up and 6000 feet down) started at Guitar Lake and ended at Whitney Portal with a side trip to Whitney Peak. The entire hike (218 miles or so) was much like the last day. Since we had been hiking for nearly three weeks and our packs were nearly devoid of food, it was, amazingly, not a tremendously difficult hike. It was however, long.

Tehipite Canyon

Tehipite is a little visited canyon north of King Canyon NP. We entered the canyon from the north (from Wishon Reservoir). It was two days to get into the canyon. The second day included a 4500 foot drop into the canyon. There is no water on the descent. The entire group (Pete, Brother, Kathy, and Stacey’s father and I, of course) made what is one of hardest hikes I have done. Check it out on the internet – I am not alone in thinking that this is a most difficult hike.

We hiked out over John Muir Pass and Hell-for-sure pass. Trails were wiped out by rock falls. Trails were not maintained. River (not creeks but rivers) crossings on large fallen trees. Bears, high passes, glaciers, hot springs. All in all a nice (if difficult) 12 day backpack.


In 2009 we ventured into Purunuweap (the Barracks). It was a short trip into a canyon that few venture into. Slot canyons are everywhere and hikers are non-existent. If you venture far enough, Zion NP prohibits entry into the park – go figger. We had a good time despite the following. Night one wind. Lots of it. We spent the night wrapped in plastic to stay out of the blowing sand. Night two rain. We spent the night wrapped in plastic to stay dry. Night three was cold. It was 18 degrees (Fahrenheit). We left.

Powell Point

Powell Point stands at 10200 feet overlooking Bryce Canyon NP, the Escalante River, the Pariah river and the Kaiparowitz Plateau . Kathy and I rode our bicycles up from the road end (Pine Lake). The Table Top Plateau is about 2000 feet up and six miles from Pine Lake. The last six miles of the trip are on top of the plateau and the last mile is walking only. Trust me when I say it was little visited. It is also a special place.

Capitol Reef NP/Boulder Mountain

There are several great hikes in Capitol Reef NP. One that I really enjoy is Sulfur Creek. It is a generally deserted hike from the east side entrance to the visitor center. Sulfur creek has water; three water falls, and numerous bathing pools along the way. I have done this hike several times and have never seen anyone, despite the fact that it is directly behind the visitor center.

However, the real adventure is a bike trip from Boulder Mountain entering the park from near the south end of the scenic road. The ride starts high on Boulder mountain at Pleasant Creek Campground . The “road” descends nearly 3000 feet to the desert below Lower Bowns Reservoir before crossing the desert and rising to the south entrance of capitol Reef NP. There it rolls into the main section and campground of the national park. I have taken this trip twice, once alone and once with Stacey.

There is a great slot canyon on Pleasant creek in the desert. If you get there you are lost (at least it is not on the way to the park). I did (got lost) on my first trip (solo). I took Kathy to this slot once. The trip back up to the camp was long, hot and arduous. Of course continuing on into the park is not easy. This is a classic and unused bicycle trip.

On and Near the Markagunt Plateau

There are a couple of really adventurous bike rides and hikes across the Markagunt Plateau. I lived on the plateau (at Swains Creek) for twenty summers. Needless to say, Kathy and I (and friends) took some really great bike rides and hikes there. Today the plateau is overrun by ATVs. However, ATVs don’t tend to range far. They are, after all, ridden mainly by children. In addition to the great bike rides across the plateau, there are a couple of nice rides from the plateau to Zion NP and its environs. These trips crossed privately held lands that lack all development.

Without going into much detail, some great rides were A. Cedar Breaks to Swains, B. Midway Meadow to Mammoth Creek, C. Swains Creek to East Zion, D. Navajo Lake to East Zion, E. East Fork Asay Creek/Strawberry meadow loop, F. Swains Creek to Strawberry Point. I took many of these rides several times.

Of interest was the ride to Mammoth Creek as Kathy and I were attempting to find the cutoff into Duck Creek Village. We missed it. A long ride later we arrived at Mammoth Creek, about 2500 feet down and 12 miles away from Duck Creek. We hitched a ride back to our starting point.

The ride from Swains Creek to Zion was discovered as Andy Osterhaut and I tried to find the road down Muddy Creek to Mt. Carmel from Swain’s Creek. We needed to hitch a ride out to East Zion to ensure that we were on time to meet our ride at Orderville. We did eventually find the road along Muddy Creek, but the ride to East Zion is much nicer – if longer. East Zion became our preferred destination

A truly great cross country hike is to the headwaters of the East Fork Asay Creek from Mammoth Cave. A section of the Plateau that is essentially devoid of development – and totally unused.

Finally, just across Hwy 89 at Mt. Carmel/Orderville is Red Canyon. This is a little visited but beautiful slot canyon.

White Peak

During the summer of 1998 I was invited to hike White Peak with Colleen and friends. Kathy had just had a hysterectomy, so it would be Colleen, her current beau and I. White peak hike starts at the road end at about 11000 feet and climbs to the peak at 14250. There is a valley in the middle which adds a bit of climbing – in both directions. I made the hike up the peak in just over 5 hours. The views from White Peak are phenomenal. It took about 2.5 hours to hike down.

It is a long trip to/from the trailhead. There is a great campground at about 8000 feet – Grandview Campground. Starting from Grandview saves a lot of driving from Bishop. When I camped there the night before we had several inches of heavy wet snow – it crushed my tent. Still, it is a beautiful (and free) campground.

The Death Road

Kathy and I traveled to South America in 1990. We spent 45 days traveling from Rio de Janeiro, Brazil to Lima, Peru. There were several highlights (as one might expect) including hiking the trail of the ancients, seeing Iguazu falls and spending a few days in the Pantanal of Brazil. We visited el Salar de Uyuni and floating islands in Lake Titicaca. However, I and the younger people in our traveling group (Peter, and two Finnish girls) rented bicycles and road “the death road” outside La Paz, Bolivia.

Starting at about 15000 feet the ride is essentially all downhill ending at about 2000 feet. It begins in the snow and ends in the jungle. The ride is about 40 miles long and essentially all on dirt road. It has become one of the world’s great attractions for downhill bike riding – and justifiably so.

Kathy just visited La Paz, got slimed and almost robbed. That is another story.

Where do I Live?


Where do I live? is an important question – especially when it comes to tax time. It is also an interesting question. Further, it is one without a clear answer and one that is regularly flouted.

There have recently been a couple of articles that have addressed this question (i.e. ). These articles seem to acknowledge that the states get to determine who lives there. They don’t (IMO). What I intend to do here is demonstrate how ludicrous the rules are, how they are flouted by some, and can be flouted by many more. The tax savings can be significant.

Recent History

I’m certain that many people with significant means have moved. Surely tax considerations are an important part of the decision process concerning when and where to move. I am familiar with several presidential candidates decisions and will merely list those here. I’m sure there are others.

George H. W Bush lived in Texas when he was vice-president. He owned no home in Texas. The only home he owned was in Maine. According to , “To confirm the state as the First Couple’s legal domicile, Bush simply signed a declaration stating that he intended eventually to return to Texas permanently. The Bushes are not required to spend even a minimum number of days in the state.” In other words, he lived in Texas because he said he would live in Texas.

And, by the way, Texas has no state income tax. Go Figger.

Dick Cheney moved to Wyoming just before the 2000 presidential election. Why? Wasn’t the tax break he got in Texas sufficient? Well, a little known part of the constitution requires that the President and vice-president reside in different states. So, say sayonara to Texas and hello Wyoming. Not to even let residency “requirements” get in the way. Who cares about owning a home etc. His dog wasn’t even licensed in Wyoming.

And, by the way, Wyoming, like Texas, has no income tax.

Donald Trump moved from New York to Florida. As his taxes continue to be under wraps, only Mr. Trump and his lawyers really know the reasons behind it. As a point of fact, he is not allowed to live at Mar-a-Lago.

And, by the way, Florida has no state income tax.

Personal Choice

I quit work in 1987. I owned a home in Ohio, a home in South Carolina, a home in Utah, and a timeshare in Nevada. My income was paid by a bank in Boston, to a brokerage in San Francisco. I owned automobiles in Utah and Ohio. Where should I live? obviously Nevada.

I told TIAA-Cref (my retirement income supplier) that I lived in Nevada and gave them a PO box (general delivery) in Mesquite, NV, and lived in Nevada. Despite owning three homes, I was homeless in Nevada. I am pretty certain that I was not alone. There are many homeless people in Nevada. Being homeless means not having a home. It does not require you be poor. (see Howard Hughes).

And, by the way, Nevada has no state income tax.


If presidents and vice-presidents can move to tax advantage their income, so could I and so can you. It is easy enough to have retirement income sent wherever, claim to be homeless in a tax free state (you won’t be alone) and not pay state income tax. What is good enough for the goose (Bush, Trump, Cheney, Me) is good enough for the gander.