Machiavellian said:
Baalzamon said:
I always wonder when people talk about the volatility and risk of the stock market. These people seem to ignore that over 40-60+ year periods (which is what social security is over), the market is incredibly reliable. Individual stocks, not so much (as companies go out of business). But the whole stock market is about as reliable as it gets. To the point where if our markets were lower in 40-60 years than they are now, we've fallen into the most incredibly massively deep depression the modern world has ever seen.
I'm going to toss out a conservative number just to illustrate this. Let's say the market averages 7.5% over my working career (the 200 year averages are closer to 8-9%).
12.4% of my earnings are going towards my retirement. Let's also assume 2.4 of that goes towards the less fortunate who didn't earn a lot, people who became disabled, etc. So 10% of my salary. (realistically, this is ignoring the pool of people that pass away before retirement, or even right when their retirement starts, etc).
If I earn $30,000 per year (this is $15/hr). I average 2.5% raises each year. And I work for 45 years (age 20 to age 65). The investments earn, as discussed above 6%. At age 65, my pool of money alone would contain approximately $1.5M. Adjusted for 2.5% inflation, this is worth approximately $500K in today's money.
Per a CNN annuity calculator, this would buy you an annuity worth $2,702 per month (in today's dollars). This means your retirement is literally more per year than your pre-retirement income. If you can show me a scenario where social security is remotely CLOSE to fully replacing pre-retirement income (and doesn't have massive funding concerns), I'm all ears. |
What are you saying, that you can manage your retirement better than social security. If this is the case then I have no argument since I have both a IRA and 401K. If you are saying every American can and will do this then that is being very optimistic. The whole point of SS is that a large portion of Americans do not manage their retirement and thus do not have anything to help them when they become retirement age and out of work. I would be in favor of being able to take my SS dollars and manage it myself if that was an option but I am not sure if I am willing to have it privatize unless I see a comprehensive plan that I can agree on.
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My argument here actually isn't anything to do with people being able to guide their own investments in social security (nor do I really think that should be allowed, as you WILL have horror stories).
No, my argument is that the government could very easily be investing social security funds in broad market index funds, vastly increasing the average return on investment, and thus improving the amount of money available to retirees.
