A reader sent me this question this week:

Q: I have a growing concern that the Obama administration will seize all 401(k) accounts as a “fix” for social security. The Democrats in Congress were talking about doing this as recently as October, 2008. Am I being paranoid? What do you think? Should I be worried?

I am seriously considering pulling much of my 401k out, paying taxes, paying off all of my debt except my home mortgage, and putting future investment money in CDs. Please give me your thoughts.

A: I do not believe for one moment that the federal government (led by President Obama or anyone else) will seize individual’s 401(k) accounts and use the money to pay for the underfunded Social Security. That’s hogwash. Can you imagine the civil war that kind of move would incite?

But I do think that the Social Security funding issue will need to be addressed, and soon. What may well happen is that the age to receive full Social Security benefits will increase from 67 to 69 or even 70. This makes some sense anyway, as Americans live longer. We might also see benefits taxed at a different amount, depending on how much total income someone earns.

But I don’t see anyone taking our 401(k)s, our houses, or our belongings in order to settle the Federal debt.

Thanks for writing.

March 12, 2009.