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Meanwhile, if I could have invested that 12% in a 401k, in addition to the 15% I contribute, I could have already retired in my 40’s. SS is such a horrible sca

Meanwhile, if I could have invested that 12% in a 401k, in addition to the 15% I contribute, I could have already retired in my 40’s. SS is such a horrible scam. Run an amortization table on what you could have done with it, and what you’ll get to in return in even the shittiest interest rate. It’s depressing.

wahern 8y ago
In 2009? Social security is a defined-benefit program, not defined-contribution. It matters when you're talking about securing the elderly from severe deprivation, especially when they're the most vulnerable. And what about the guy who blows his savings on bad tech stocks? Are you and the rest of the electorate prepared to kick him to the curb? You may spend extravagantly expecting to live to 85, but what if you live to 105? Social Security acts more like a life annuity. Yes, the rate of return sucks, but relative to what the free market offers in life annuities its not too bad. Social Security taxes are capped at $128,000 for 2018 (it's indexed and increases each year). If you say you could have retired at 40 without cherry-picking retrospective market highs, I assume you've been making significantly more than the SS cap all this time. So, I ask you, did you actually investment 27% of your income over that cap in retirement funds? (Whether tax deferred or not shouldn't matter.) Social Security is a back stop. It's hardly ideal but it doesn't exist in isolation. It exists in a context where financial markets and retirement funds are very lightly regulated. Where enforcement regimes are often intentionally left toothless and ineffective. Privatization of Social Security would be more likely to end up like in Chile[1], where banks skim double-digit management fees and enforcement of mandatory contributions is absent, than in Australia or Singapore where private, individual savings plans work within a constellation of supplementing policies. [1] Using a system largely designed by conservative American economists.
- madengr 8y ago
  I’ve been making 401k contributions for 22 years (through the 2000 and 2008 dips), most of that time, maxing it out. If I add in the additional SS tax (limited by the cap), stopping contributions at 67, by 85 I’d have $17M accumulated at a 4% interest rate. As I said, you have to run the numbers yourself, but it’s mind boggling how much you are losing, even more so if you die at 67, the government walks away with it all.
  - Marazan 8y ago
    No, the government has already spent it on current retirees as you pay.
  - Frondo 8y ago
    When you die at any age, the rest of us walk away with everything you had. The big questions are how we divide that up (do we give it all to your children, do we put it back into the public coffers, etc). "You can't take it with you" isn't just empty words.
    - madengr 8y ago
      It should go into “my” estate to do as “I” see fit, not for “we” to decide.
  - usaar333 8y ago
    I'm not following your numbers. Max social security contribution is $16000 a year. 30 years of contributions at 4% return gives $1m; at 8%, $1.8m
    - madengr 8y ago
      It was SS plus 401k contribution, over 60 years of interest, with 40 years of contributing. Download your earnings history from SS.gov, and paste into a spreadsheet to play with the numbers.
hamandcheese 8y ago
If you want these things to work for the poor then you need to accept that it won’t be a good deal for the (comparatively) rich. Just like health insurance premiums (or the taxes you pay if you live under a single payer system) are a terrible scam for those of us who are (comparatively) healthy.
- dboreham 8y ago
  This is true only if costs are constant which evidence suggests they are not. E.g. my insurance company pays far less for <insert any medical procedure> than I do if I don't have insurance that covers it.

wahern 8y ago

In 2009? Social security is a defined-benefit program, not defined-contribution. It matters when you're talking about securing the elderly from severe deprivation, especially when they're the most vulnerable. And what about the guy who blows his savings on bad tech stocks? Are you and the rest of the electorate prepared to kick him to the curb? You may spend extravagantly expecting to live to 85, but what if you live to 105? Social Security acts more like a life annuity. Yes, the rate of return sucks, but relative to what the free market offers in life annuities its not too bad. Social Security taxes are capped at $128,000 for 2018 (it's indexed and increases each year). If you say you could have retired at 40 without cherry-picking retrospective market highs, I assume you've been making significantly more than the SS cap all this time. So, I ask you, did you actually investment 27% of your income over that cap in retirement funds? (Whether tax deferred or not shouldn't matter.) Social Security is a back stop. It's hardly ideal but it doesn't exist in isolation. It exists in a context where financial markets and retirement funds are very lightly regulated. Where enforcement regimes are often intentionally left toothless and ineffective. Privatization of Social Security would be more likely to end up like in Chile[1], where banks skim double-digit management fees and enforcement of mandatory contributions is absent, than in Australia or Singapore where private, individual savings plans work within a constellation of supplementing policies. [1] Using a system largely designed by conservative American economists.

madengr 8y ago
I’ve been making 401k contributions for 22 years (through the 2000 and 2008 dips), most of that time, maxing it out. If I add in the additional SS tax (limited by the cap), stopping contributions at 67, by 85 I’d have $17M accumulated at a 4% interest rate. As I said, you have to run the numbers yourself, but it’s mind boggling how much you are losing, even more so if you die at 67, the government walks away with it all.
- Marazan 8y ago
  No, the government has already spent it on current retirees as you pay.
- Frondo 8y ago
  When you die at any age, the rest of us walk away with everything you had. The big questions are how we divide that up (do we give it all to your children, do we put it back into the public coffers, etc). "You can't take it with you" isn't just empty words.
  - madengr 8y ago
    It should go into “my” estate to do as “I” see fit, not for “we” to decide.
- usaar333 8y ago
  I'm not following your numbers. Max social security contribution is $16000 a year. 30 years of contributions at 4% return gives $1m; at 8%, $1.8m
  - madengr 8y ago
    It was SS plus 401k contribution, over 60 years of interest, with 40 years of contributing. Download your earnings history from SS.gov, and paste into a spreadsheet to play with the numbers.

hamandcheese 8y ago

If you want these things to work for the poor then you need to accept that it won’t be a good deal for the (comparatively) rich. Just like health insurance premiums (or the taxes you pay if you live under a single payer system) are a terrible scam for those of us who are (comparatively) healthy.

dboreham 8y ago
This is true only if costs are constant which evidence suggests they are not. E.g. my insurance company pays far less for <insert any medical procedure> than I do if I don't have insurance that covers it.