• Second in a series

For many younger Americans, the notion that Social Security won't be around when they retire has achieved the status of urban legend. Fortunately, it's as bogus as the tale of alligators stalking the sewers. Nevertheless, it's a useful device to scare a generation of workers into believing that drastic changes have to be made -- now. Fear is a powerful motivator.

If the evidence of Social Security's own trustees is to be believed, however, reports of the program's imminent demise are vastly exaggerated, if not misleading. The trustees say a deficit will exist by 2042 -- there would not be enough money to pay the expected level of benefits. By 2078, this shortfall would amount to a mind-boggling $3.7 trillion in today's dollars.

But the trustees themselves warn that ''the estimates are not intended to be specific predictions of the future financial status'' of the program. Of course not; no one can predict accurately how the economy will perform over the next 75 years. Even tiny variations in demographic or economic trends can make a world of difference.

Some say the system will be broke in 13 years. This, too, is misleading. That's when the trust fund goes into deficit -- more payouts than revenues -- and will have to draw on its assets in order to make ends meet. But since these assets are bonds from the U.S. Treasury, it's a safe bet the system will continue to meet its obligations. Even if left untouched, Social Security would be able to pay about 70 percent of benefits in 2042.

If the fund's projections turn out to be too pessimistic, as they have in the past, this deadline could be extended. In any case, these actuarial figures do not add up to a case for drastic overhaul. More to the point, they do not suggest a need to transform a retirement insurance program, a pension guarantee, into something substantially different -- an investment program.

President Bush's preferred solution, as-yet-undefined personal accounts, has some undeniably attractive features: a measure of individual control over one's retirement fund; the possibility of accruing greater benefits; and, under some circumstances, the possibility of passing it on to heirs. It sounds good until the costs and pitfalls are examined.

Obviously, it introduces an element of risk. Some workers will do well, but not every American has the investment acumen of market billionaire Warren Buffett. Instead of everyone getting a guaranteed benefit, the system will produce winners and losers. Poor investment choices equal poor returns -- piled atop fewer benefits due to the diversion of funds into the personal accounts. Anyone who retires after a market crash could take a serious hit. What then?

Nor would personal accounts do anything to fix Social Security's projected funding gap. At best they are a wash. Other money-saving changes will be required, probably in the form of reduced benefits.

Another consideration is that the surge of investment from private accounts will, inevitably, trigger a market reaction. A likely result is that as a huge pool of money suddenly develops, stock prices will be artificially inflated to suck up this bonanza -- decreasing the real value of the investment.

Then there's the cost of borrowing. If persons under 55 can divert up to four percentage points of their payroll taxes into private accounts, the government would have to borrow money to cover costs for today's beneficiaries. The lowest estimate -- probably too low -- is $750 billion through 2015. Other estimates go up to $2 trillion and more. Where this money would come from and how much it would really amount to is, to borrow a phrase from Defense Secretary Donald Rumsfeld, ``a known unknown.''

But here's what is known: It will add even more to America's crushing deficit and national debt. This is the real alligator that threatens the health of America's economy and one that must be disposed of before it gets any bigger.

• Tomorrow: How to keep Social Security sound.