Jump to content

Social Security

Recommended Posts

  • Replies 71
  • Created
  • Last Reply

Top Posters In This Topic

Let's see, the maximum one could pay into the social security system this year is $6621.60 per individual (or 13243.20 if self-employed). For the year 2000, the maximum was $4724.40 per year. For 1990, $3180.60 For 1980, $1605.80, 1970 only $483.60. So let's say jblake47 has for the past 48 years (1963 to 2010) worked for ABC Corp. earning $1,000,000 per year (I'm generous in my examples) - he would have paid in $135,197.20 (average of $2816.61 per year or a whopping 0.28% of his pay!).


The Governmnet does not invest social security funds for few reasons. The main reason is not because of the fear / risk of loss. The main reason is do we really want the Government to be investing in the stock market and deciding which companies to back or not back? Think of what corruption that could lead to!


So let's say jblake47's contribuions earned something like a 4% (modest in some years but great for now!). He would have just under $250,000. Not the millions he envisions. He would be earning something like 27,000 per year (over 10% of what he put in) so all in all, not too bad of an investment.


When I was born, the country had a about a 16 to one ratio of folks paying in to those receiving benefits. The time I was a father & husband (no, not in that order) it was more like 3 to 1. In 2040 it is assumed to be around 1.8 to one and by 2070 something like 1.3 to 1.

Link to post
Share on other sites

Well, acco, now you're forgettin' about da employer's contribution. So assuming jblake could bargain for da same net salary cost, you'd double all your figures.


Startin' in 1963 as you say, and assumin' a rate of return equivalent to just the principal growth in da S&P500 over the period (6.5%), that would give jblake just shy of $900K, or at da same 6.5% an annual income of $57K without drawing down da principal. That's not including dividends, eh? If yeh add in even modest dividend yields, it puts his principal well up over $1M at retirement, or an annual retirement income in the $75K range.


By contrast, da maximum social security benefit from the same hypothetical individual would be $2346 per month, or a bit over $28K per annum.


So private investment returned between 2 and 3 times what social security did in terms of retirement income, even given da dismal performance of the market for the past 10 years. And of course he has no principal to draw from with social security, where with private investment he still has a million or so dollars in the bank to use as he sees fit. Drawing down the principal would of course yield a retirement income vastly in excess of social security.


Now, yeh could say he'd probably have been less aggressive than 100% in equities in his later years, in which case he'd have done even better. ;)



(This message has been edited by Beavah)

Link to post
Share on other sites
  • 2 months later...

Sorry to resurrect an old thread, but I just came across this article that fits nicely with the earlier part of this discussion:


I particularly like the quote from Mr. Dobbs in the last paragraph:


I did not choose to be disabled, Dobbs said. I didnt want the stigma of being disabled. As for privatizing any part of the system, he said: I worked for an insurance company. They fired 10 percent of the twenty-five- and thirty-year people so their stock would go up. If you privatized it, those are the bastards who would run it.

Link to post
Share on other sites

Also in da news today, CBO says the Social Security system is now in permanent deficit mode, drawing down on the non-existent "trust fund". Or in other words, draining tax dollars.


The part of Social Security that provides Mr. Dobbs with disability income will exhaust its trust fund by 2017, a scant 6 years from now, and then be effectively bankrupt.




I suspect that the private insurers will still be around, eh? ;)




Link to post
Share on other sites

FDR's promises to get SS set up:


1.) That participation in the Program would be completely voluntary.

No longer Voluntary


2.) That the participants would only have to pay 1% of the first $1,400 of their annual incomes into the Program,

Now 7.65% on the first $90,000 - Strike that! NOW (5.65% plus the employers' 7.65%) $106,800 for 2011.


3.) That the money the participants elected to put into the Program would be deductible from their income for tax purposes each year.

No longer tax deductible.


4.) That the money the participants put into the independent 'Trust Fund' rather than into the general operating fund, and therefore, would only be used to fund the Social Security Retirement Program, and no other Government program.

Under Johnson the money was moved to The General Fund and Spent.


5.) That the annuity payments to the retirees would never be taxed as income.

Under Clinton & Gore up to 85% of your Social Security can be Taxed



Under Jimmy Carter and the Democratic Party, immigrants moved into this country, and at age 65, began to receive Social Security payments!

The Democratic Party gave these payments to them, even though they never paid a dime into it!


Then, after violating the original contract (FICA), the Democrats turn around and tell you that the Republicans want to take your Social Security away!


(OGE here, sorry such acronyms are not scouting appropriate even in the politics sections, even if I agree with the post, good points JoeBob


Only in a society under the sway of a purposefully ignorant media... (This message has been edited by a staff member.)

Link to post
Share on other sites
  • 2 weeks later...

Acco and Beavah, double the numbers in your calculations. There is no difference in what is paid in whether you are self employed or work for someone else. The total max is still over $13k a year because your employer matches you. Out of the funds he has set aside for labor costs. You have to use all the funds contributed by/for you to have an accurate comparison.


I did some calcs a few years ago. If I could have invested for myself what I paid to SS for only the last 10 years I worked (forget the other 35), I would be retired on well over triple the monthly money, and pass the entire principal on to my kids!

Link to post
Share on other sites

I'm a recently retired firefighter from a very large metropolitan area. Our fire/police pension fund is 106% funded. The reason why that is is simple, the fund is managed by a board of trustees that is elected from the membership. They have every reason to keep the fund in top shape since they will also be drawing from it one day. Also we refused to let the politicians get their grubby hands on any of it for their pet projects!

Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!

Register a new account

Sign in

Already have an account? Sign in here.

Sign In Now
  • Create New...