Social Security Calculator

Here is a calculation for what the median income earner would have in his S&P 500 account, had he been able to invest it privately instead of in Social Security. This is for a current retiree, age 65. We assume he/she has been working since age 20 (1961->), and earning the median income level each year.

The median income earner would retire at age 65 with over $1.1 MILLION dollars in his account, even after accounting for the crash of '87, the dot-com bust, etc. At 6% interest, he would get $5500 per month for the rest of his life, and leave the $1,000,000 to his kids. With Social Security, what will he get? Maybe $1300 per month, and when he dies, Ted Kennedy gets to spend it. Plus, his working spouse would also have an account! So, the couple could retire with a nice income, even more than what they ever earned while working! SS is keeping the American worker in poverty.

Comparing apples-to-apples, you need to account for the fact the Social Security confiscates your account when you die. Their actuaries say that the current average life expectancy for a retiree at the age of 65 is approximately 81 for a male and 84 for a female. So, they think your account needs to last 17.5 years. If your private account at retirement paid you 5% interest, and you drew it all out in 17.5 years, you would be able to take $7700 per month, about 6 times more than Social Security. Even taking the Zero-risk approach of investing your retirement funds in EE US Savings Bonds would let the median income earner draw out $1905 per month, about 50% higher than SS!

And this is just the median income earner. You can enter your own incomes and hit "Recalculate" to see what your own account would be.

Here is another way to look at this... At 6%, to get $1300 per month forever, you need $260000 in your account (let's forget about the part where the govt confiscates your account when you die). This median-income worker could retire at that payout in 1991, at age 50!! Social Security made him work for 15 more years to get the same payout.

Get your latest Social Security Statement, and plug in your own numbers to see what your account would be.

Have you heard people ask, "Yeah, but it's too risky. What if the market crashes?" Well, let's say the market crashes, and loses 75% of its value the year you want to retire. Where would you be? Still in a better position than Social Security puts you!

NOTE: Medicare contributions are shown, but not included in the private accounts. The Private accounts are investing only the Social Security (Old Age and Disability) contributions.

Social Security & Medicare Withheld Private Account Returns
Year Median Income SSDI Rate Medicare Rate SSDI Withheld Medicare Withheld S&P 500
Total Return		 SSDI Acct Value
in S&P 500		 Savings Bonds
(E/EE)Return
100% safe!		 SSDI Acct Value
in Bonds
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      Total Paid Total Paid

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