Social Security Calculator
Should the Social Security system be privatized?
Is the Social Security system forcing retirees into a life of poverty?
Below is a calculation showing what the median income earner would have in a private account, had he been able to invest it in the broad market (S&P 500), instead of in the Social Security system. This is for a current retiree, age 68. We assume he/she has been working since age 19 (1961->), and earned the median income level each year.
With a private account, the median income earner would retire at age 68 with roughly ONE MILLION dollars in their account, even after accounting for the crash of '87, the dot-com bust, the crash of 2008, etc. At 6% interest, he would get $5000 per month for the rest of his life, and leave the $1,000,000 to his heirs, ending the cycle of poverty. With Social Security, what will he get? Perhaps $1300 per month. And when he dies, the account is lost. A working spouse would also have an account, so a couple could retire with an incredible income, even more than what they ever earned while working! Instead, Social Security is keeping the American worker in poverty at retirement.
Comparing apples-to-apples, we need to account for the fact that Social Security confiscates the person's account when they die. Their actuaries say that the current average life expectancy for a retiree at the age of 68 is approximately 81 for a male and 84 for a female. So, they think the account needs to last about 14 years. If the retiree's private account at retirement paid 5% interest, and they drew it all out in 14 years, they would be able to take $8000 per month, about 6 TIMES more than Social Security. Even taking the zero-risk approach of investing any retirement funds in 10 year US Treasury Bonds would allow the median income earner to draw out $3000 per month, about 50% higher than SS! For those unfortunate enough to die before retirement, their accounts are confiscated, with meager returns passed to their survivors.
Here is another way to look at this... At 6%, to withdraw $1300 per month for 14 years, a person needs $210000 in their account. This median-income worker could have retired at that payout in 1991, at age 49! Social Security made him work for 19 more years to get the same payout.
Again, this is for the median income earner. You can enter your own income figures. Get your latest Social Security statement, plug in your own numbers, and hit the "Recalculate" button to see what your account value would be.
We've all heard the argument, "Yeah, but it's too risky. What if the market crashes?" Well, let's say the market does crash, and loses 50% of its value the year you want to retire. That is not likely, but could happen. Where would you be? Even in that worst case, you are still better off than with Social Security. And, historically, the market has usually recaptured much of the loss soon after a crash. Also, let's not forget that Social Security is the world's biggest Ponzi scheme. It is unsustainable, and future generations will pay more to get less. All Ponzi schemes eventually crash.
NOTE: Medicare contributions are shown for study, but not included in the private accounts. The private accounts are investing only the Social Security (Old Age and Disability) contributions.
With a private account, the median income earner would retire at age 68 with roughly ONE MILLION dollars in their account, even after accounting for the crash of '87, the dot-com bust, the crash of 2008, etc. At 6% interest, he would get $5000 per month for the rest of his life, and leave the $1,000,000 to his heirs, ending the cycle of poverty. With Social Security, what will he get? Perhaps $1300 per month. And when he dies, the account is lost. A working spouse would also have an account, so a couple could retire with an incredible income, even more than what they ever earned while working! Instead, Social Security is keeping the American worker in poverty at retirement.
Comparing apples-to-apples, we need to account for the fact that Social Security confiscates the person's account when they die. Their actuaries say that the current average life expectancy for a retiree at the age of 68 is approximately 81 for a male and 84 for a female. So, they think the account needs to last about 14 years. If the retiree's private account at retirement paid 5% interest, and they drew it all out in 14 years, they would be able to take $8000 per month, about 6 TIMES more than Social Security. Even taking the zero-risk approach of investing any retirement funds in 10 year US Treasury Bonds would allow the median income earner to draw out $3000 per month, about 50% higher than SS! For those unfortunate enough to die before retirement, their accounts are confiscated, with meager returns passed to their survivors.
Here is another way to look at this... At 6%, to withdraw $1300 per month for 14 years, a person needs $210000 in their account. This median-income worker could have retired at that payout in 1991, at age 49! Social Security made him work for 19 more years to get the same payout.
Again, this is for the median income earner. You can enter your own income figures. Get your latest Social Security statement, plug in your own numbers, and hit the "Recalculate" button to see what your account value would be.
We've all heard the argument, "Yeah, but it's too risky. What if the market crashes?" Well, let's say the market does crash, and loses 50% of its value the year you want to retire. That is not likely, but could happen. Where would you be? Even in that worst case, you are still better off than with Social Security. And, historically, the market has usually recaptured much of the loss soon after a crash. Also, let's not forget that Social Security is the world's biggest Ponzi scheme. It is unsustainable, and future generations will pay more to get less. All Ponzi schemes eventually crash.
NOTE: Medicare contributions are shown for study, but not included in the private accounts. The private accounts are investing only the Social Security (Old Age and Disability) contributions.