Accountants and fund advisors--is social security getting an unfair rap on costs?

[mistertrickster]

If you look at how Social Security administrative costs are figured, people usually take the benefits paid out (about 400 billion in 2003) and then divide that by the costs (2.6 billion in 2003). The figure you hear a lot is "less than one percent" or 0.65 percent to be more precise.

http://www.ssa.gov/OACT/TR/TR04/II_cyoper.html

But that's not how mutual funds calculate costs, is it? Funds calculate costs based on a percentage of ALL ASSETS UNDER MANAGEMENT, in other words all the money they've got--not just what they pay out.

Since total assets held in the special bond trust fund were something like 1.5 TRILLION for 2003, administrative costs of 2.6 B would be a factor of ten SMALLER, e. g., not less than one percent, but less than ONE-TENTH of a percent.

Have I made an error anywhere? And if I haven't, why do people keep talking about SS's administrative costs as being higher by a factor of ten than they really are?

[mistertrickster]

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