The Post is right that Social Security is too small for changes in it to have much effect on the country's fiscal future [editorial, Aug. 17], but part of its reasoning is faulty.

The editorial said that Social Security privatization would let holders of individual savings accounts buy stocks, which would produce investment returns; this would shift from a pay-go system to a pre-funded one. But that can be true only if the investment returns can be converted into retirement income for baby boomers without selling the stocks or if younger workers do not have to buy most of the stocks when they are sold.

But the stocks will have to be sold, and younger workers will have to buy most of them unless ownership of U.S. companies is to be exported; the pay-go system will remain, albeit linked to the vagaries of the stock market.

The Pension Benefit Guaranty Corp. has this problem now. The "pre-funded" pension systems that it insures depend on contributions from current workers and on selling stocks, largely to retirement plans of workers in other companies. As employment in mature industries declines in relation to their number of retirees, the plans become underfunded.

Social Security is strong because it doesn't depend on selling stocks to younger workers, and it will be needed in its present form if plans that depend on stocks do fail.

THORNTON PARKER

Washington

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It's too bad that The Post didn't figure the costs to individuals of privatized Social Security [editorial, Aug. 15]. President Bush may tout an "ownership" society, and it is a wonderful concept, but people working at Wal-Mart will never qualify for ownership of anything.

WILLARD COTTRELL

Burnsville, N.C.