Gimme My $1.395 Million Back!
I know for a fact that I’m not going to get my share of Social Security and I don’t even have a choice whether I want to contribute or not. But how much will my share be?
Lets assuming the average person makes $50,000 a year for 35 years. Even though most people start working with they’re 16 and keep working until they’re 65, we’ll exclude the first 14 years when they may not be making a lot. We’ll also ignore the effects of inflation and salary increases to keep the math simple.
Considering that Social Security taxes (FICA and Medicaid) are ~15%, (even if you’re an employee andd only pay half of that, its a cost to your company that results in a lower salary to you) that comes out to $7,500 per year. Considering the savings could have been invested in the stock market at 8%, the total comes to a whopping $1,395,766.11.
But the Government doesn’t have enough to pay out the baby boomers through the end of the next decade. So I’m sure I’m not going to get of my Social Security checks in 30+ years.
I think the government should privatize Social Security and create individual accounts for everyone. Or atleast stop taxing me and let me figure out my own retirement!
To see the opinions of various presidential candiates regarding Social Security, check out this link. And please vote for Ron Paul if you’d like the president to be someone who realizes that we’re bankrupt and the monetary system needs to be fixed.
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October 25th, 2007 at 1:14 am
They’ll either raise the tax or reduce the benefit (later start date or lower amount). The scheme has often been modified. It’s simply not true that people working today will for sure not get US social security. Even I can apparently claim some even though I only worked in the US paying the social security tax for 6 years on the basis of having worked in Australia.
Of course here we don’t have social security. There is a means-tested age pension and compulsory retirement saving in individual accounts (superannuation).
October 25th, 2007 at 6:13 am
I’m afraid I have to agree with moom. Any politician who even suggests taking away Soc Security will be flogged. What will happen is they will raise SS taxes and increase the age at which you can draw from it.
October 25th, 2007 at 9:42 am
the government is already lying about inflation. Its taken out energy and housing costs to make it seem like inflation is low. This has the effect of reducing their payouts on SS.
We may get SS but the amount will be so reduced to be almost meaningless.
Imagine getting $1000/mo in San Diego. That’ll just cover the cost of medication. There was an article a few years ago about seniors having to choose between food and medication.
Maybe all the old people moved to Mexico?
October 29th, 2007 at 5:01 pm
This is totally unrealistic. Firstly, ignoring inflation over such a long time period grossly over-estimates growth potential. Assuming inflation is 3-5%, your total savings would be 470k-710k in 2007 dollars. But this assumes that you could indeed realize an 8% annual return which is certainly not guaranteed. In the past there has been long periods with market returns significantly below this mark and times of negative returns. Even if 8% were an accurate number, an added annual inflow of $750B into the markets (100M American workers with $7500 each to invest) would surely push this number down.
October 29th, 2007 at 5:44 pm
With inflation and annual increases in the contribution limits the number goes up – NOT DOWN.
With more people retiring than entering the workforce, there is going to be a huge drain on SS. Not only that, but the government hasn’t saved the SS contributions – IT’S SPENT THEM!
And anyone should be able to get 8% over a 20 yr period. Read Ben Stein’s “yes you can time the market” for proof and historical information on this.
And to get more than 8%, keep on reading this blog!
October 30th, 2007 at 4:36 am
I’m sure you’ll get something, just not as much as the seniors today get, and mostlikely you will not get your contributions back unless you live to be 100 =P
All that said, phasing out social security is touchy because today’s dollars support yesterday’s retirees (that is what happens when you start a program like social security without a waiting period before the initial people can start retiring!) Oh yeah, and the kicker is that those are also the people who actually go out and vote.
Also, if it was privatized, what would the government borrow money from?
October 30th, 2007 at 6:27 am
People quickly forget when you discuss Social Security, you’re also talking about survivor benefits and disability benefits not just retirement income.
So when you do your fuzzy math hypotheticals, factor in the cost of a lifetime disability plan (good luck finding that at any price) and save enought to fund your spouse with a monthly income (adjusted for inflation) until your children reach 18.
Turn my retirement over to the theives on Wall St? Yeah right.
November 3rd, 2007 at 3:30 pm
“People quickly forget when you discuss Social Security, you’re also talking about survivor benefits and disability benefits not just retirement income.”
All the more reason that Socialist Security should be eliminated. Just call government aid what it is: welfare for the lazy, stupid and a small % of people who are just unfortunate.
November 4th, 2007 at 1:19 pm
Social security is the biggest Ponzi scheme yet.
The problem: need to anchor the currency “by creating mass demand” without impacting the ability to raise capital “large investors”.
The solution: implement a tax that takes from the poor a significant disproportionate amount of their income while leaving out the greater than 90k income out for the rich.
Do you ever wonder why the government doesn’t include future Social Security and Medicare liabilities on the books, because it never plans on meeting those future liabilities or fulfilling those promises.
November 20th, 2007 at 6:07 am
Word.
August 5th, 2008 at 1:25 am
“The solution: implement a tax that takes from the poor a significant disproportionate amount of their income while leaving out the greater than 90k income out for the rich.”
And that understates the matter: Most rich people get a significant percentage of their income on ways that aren’t subject to SS and Medicare taxes from dollar ONE, let alone after $90k. E.g., dividends.