I’m not sure how to title this post. It’s a forward from the idiot Barber. In it we’re going to see how specious all prior arguments about freeloaders and socialism really are. I mean – the government owes Barber a ton of money by his(her?) calculation. It’s all wrong because nothing the Barber forwards is fact checked – I’ll do a little through the email:
Who died before they collected Social Security?
KEEP PASSING THIS AROUND UNTIL EVERY ONE HAS HAD THE OPPORTUNITY TO READ IT… THIS IS SURE SOMETHING TO THINK ABOUT!!!! THE ONLY THING WRONG WITH THE GOVERNMENT’S CALCULATION OF AVAILABLE SOCIAL SECURITY IS THEY FORGOT TO FIGURE IN THE PEOPLE WHO DIED BEFORE THEY EVER COLLECTED A SOCIAL SECURITY CHECK!!! WHERE DID THAT MONEY GO?
Remember, not only did you and I contribute to Social Security but your employer did, too. It totaled 15% of your income before taxes. If you averaged only $30K over your working life, that’s close to $220,500.
Actually, Barber, Social Security is 6.2% of your wages, the employer pays the other 6.2% which, in math in the real world, amounts to 12.4%. There is an additional 1.45% (matched by your employer) held out to pay for Medicare when you get to that age. I can see where you would think it’s 15%, but you are already wrong. So $220,500 is 15% of $1,470,000. The real amount, then, is $182,280.
Read that again. Did you see where the Government paid in one single penny? We are talking about the money you and your employer put in a Government bank to insure you and I, that we would have a retirement check from the money we put in, not the Government.
Actually, according the the history of the program on ssa.gov, the government has put some funds. But the idea was that it be totally “self-funded”.
Now they are calling the money we put in an entitlement when we reach the age to take it back.
So you aren’t “entitled” to receive payments? What else can it be called?
If you calculate the future invested value of $4,500 per year (yours & your employer’s contribution) at a simple 5% interest (less than what the Government pays on the money that it borrows), after 49 years of working you’d have $892,919.98.
Again, according to SSA.gov,
The numeric average of the 12 monthly interest rates for 2012 was 1.458 percent. The annual effective interest rate (the average rate of return on all investments over a one-year period) for the OASI and DI Trust Funds, combined, was 4.091 percent in 2012.
So yeah, I can see how 5% is less than what the government pays on the money that it borrows.
So let’s see… I can get the math to work. One lump sum each year of $4,500, one compound/interest payment per year. If you don’t own a time value of money calculator, check out this future value calculator. Of course, the real number to use (not 4,500) is $3,720 and the future value of that is $738,147.85. Aside from the fact that the money is not “invested” in any real sense of the term. The current working force is paying for the current retirees. There is a “trust fund” that is really the other pocket of the government and the interest paid on that comes from gasp! the government general funds. Look! The government did put other moneys into social security.
If you took out only 3% per year, you’d receive $26,787.60 per year and it would last better than 30 years (until you’re 95 if you retire at age 65) and that’s with no interest paid on that final amount on deposit!
Honestly, it took me a while to realize that although they want to talk about earnings and interest rates there is no interest rate attached to the 3% withdrawal number. That’s the only way that figure works. It also helps if inflation didn’t require you to raise your withdrawal rate over time just to keep up.
If you bought an annuity or another investment and it paid 4% per year, you’d have a lifetime income of $2,976.40 per month.
Not in the real world. Here you have to decide on a withdrawal rate that is lower than your return – else you are going to have to eat into your principal as your expenses and and inflation rise. Of course you could decide on a withdrawal rate higher than your rate of return but you have to be confident about how long you have to live. There are variations, of course but Barber is trying to keep it simple.
Another thing – if someone died in their 50′s or before, they never withdrew one cent of their social security money that they paid into all their lives – so that money just went up in smoke?
Maybe. If they were single and never had any children. Part of Social Security is survivor’s benefits. Your spouse and children receive these funds whether they contributed anything at all. It’s only while your children are still minors, but still.
THE FOLKS IN WASHINGTON HAVE PULLED OFF A BIGGER PONZI SCHEME THAN BERNIE MADOFF EVER DID.
Entitlement my foot, I paid cash for my social security insurance! Just because they borrowed the money for other government spending, doesn’t make my benefits some kind of charity or handout!! Remember Congressional benefits? — free healthcare, outrageous retirement packages, 67 paid holidays, three weeks paid vacation, unlimited paid sick days.
Now that’s welfare, and they have the nerve to call my social security retirement payments entitlements? We’re “broke” and we can’t help our own Seniors, Veterans, Orphans, or Homeless. Yet in the last few months we have provided aid to Haiti, Chile, Turkey,Egypt and Pakistan.
Again, if you are entitled to it what else can we call it?
Literally, BILLIONS of DOLLARS!!! And they can’t help our own citizens in New York and New Jersey! They call Social Security and Medicare an entitlement even though most of us have been paying for it all our working lives, and now, when its time for us to collect, the government is running out of money.
Why did the government borrow from it in the first place? It was never supposed to be part of the general fund. They (the scum bags in Washington) stole $5,000,000,000,000 (that is $5 trillion from the Social Security Trust Fund).
It’s not gone. The only thing that the Trust Fund can be invested in is US government issued debt. There is nothing else it can be “invested” in.
Sad isn’t it. 99% of people won’t have the guts to forward this. I’m in the 1% — I just did
You’re in the 1%? Now wonder I don’t like you. It bounces around with rates of return, then 0% return. I know. Simple minds, but at least start with real world numbers. The correct withholding amount would a good start.