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hfojvt

(37,573 posts)
17. the point is that if it is a bad deal for ME
Wed Oct 24, 2012, 02:24 PM
Oct 2012

then it is also a bad deal for many OTHERS who are just like me.

And me, happens to be a very low income worker. In 2008, my FICA income was $12,604, and my lifetime earnings were $240,902 after 22 years of post college work. So projecting forward from 2008 at $12,604 a year amd by the time I am 62 in 2024, my contributions, invested at 3% are worth $94,052. Invested at 5% they are $139,256. At 5% that works out to $6963 in interest income per year or $580 a month. Social security is promising me only $592 a month - a mere $12 a month more.

But it is the government that keeps the $139,256 not me. I, and others of my income (to say nothing of those who make more) would be better off keeping that money ourselves.

Of course, that does ignore all the fools of the world. Some, if they got to keep a retirement nest egg of $139,256 would not prudently manage it for the rest of their lives, but would quickly burn through it, and there they would be at age 66 with no income AND no nest egg.

Others would be scammed out of it. A manager at the credit union was telling me about a guy who was draining his IRA account for some internet girlfriend that he had never met. Others might be kidnapped, or otherwise robbed.

Of course, too, now a safe 5% investment is hard to find. Used to be you could get more than that, 6 or 7% from a bank CD. Now you are lucky to get 1.5% from such an investment. Still, even a 3% rate of investment would leave me with $94,000 by the time I am 62. I think that I would be better off with $94,000 than with $592 a month.

Yes, social security is a much better deal for the disabled. According to my report from 2009, if I became disabled I could collect $870 a month. If, instead, I work for another 16 years at my then current pay, I collect a mere $592 a month. 16 years of work nets me $278 a month less. Not to mention that the $240,120 that I would collect in untaxed benefits over the 23 years is almost more than my lifetime earnings over the last 23 years of hard work which was only $240,902.

As to what to replace it with, that is not really relevant to the plain statement, or calculation, that it is not a very good deal even for a low income worker like myself.

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