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Old 07-20-2011, 11:58 AM  
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Social Security Calculator

Here's a neat little social security calculator to compare SS with other investment: The Heritage Foundation - Conservative Policy Research and Analysis

For a male age 66:
Quote:
Results Summary
You can expect to pay $235,556 in Social Security taxes over your working life for retirement and survivors benefits. For those taxes, you can expect to receive $2,072 a month in Social Security retirement benefits. Your rate of return under today's Social Security is 1.27%.

However, if you had been able to invest all of your Social Security taxes in a Personal Retirement Account (PRA), you would have had a total of $1,016,014 when you retired. Your monthly benefits would have been $8,037. You lost $5,965 a month.

This calculator does not reflect President Bush's reform plan. For more information on our methodology, read the FAQ.
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Old 07-21-2011, 01:47 PM  
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except it seems to be b.s.

401(k) Savings & Planning Calculator - Bloomberg
when I use that calculator the value ends up being about half for a 401k balance compared to their PRA's and that is even rounding the interest rate up on the 401k, so it seems to be using a much higher interest rate or other fudging of the numbers to push an agenda that in reality doesn't exist. Even if I count both the employee and employer match as now going toward the 401k it doesn't come anywhere close to the numbers your website suggests (and that pretends employeers will give everyone a 6% raise if social security is disbanded which I hope you aren't betting that employers will actually do so)

This point of view also corresponds with my 401k's website estimates and I am putting in a lot more then social security even when including what the employer pays and I will not hit the amount your website says I would be just from either 10%. The numbers are just not right.

it's a biased site with some bad calculations to push an agenda, nothing more.
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Old 07-23-2011, 12:22 AM  
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Remember, not only did you contribute to Social Security but your employer did too. It totaled around 15% of your income before taxes if you averaged only 30K over your working life, that’s close to $220,500. If you calculate the future value of $4,500 per year (yours & your employer’s contribution) compounded at a simple 5% after 49 years of working, you’d have $892,919.98. If you bought an annuity and it paid only 4% per year, you’d have a lifetime income of $2,976.40 per month. Average S.S. recipient in 2011 gets around $1200/month. The folks in Washington have pulled off a bigger Ponzi scheme than Bernie Madhoff ever thought of. And they put HIM in jail.
The above came in an email. I think the writer is seeking an unmolested SS Trust Fund that bears interest. Though he may be sincere I think he misses the point that if the Trust Fund bore interest it would either have to be paid out of general revenue or as a part of the deficit/debt.
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Old 07-23-2011, 11:41 AM  
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Originally Posted by Eddie_T View Post
The above came in an email. I think the writer is seeking an unmolested SS Trust Fund that bears interest. Though he may be sincere I think he misses the point that if the Trust Fund bore interest it would either have to be paid out of general revenue or as a part of the deficit/debt.
note, once again you are playing around with information missing the details, THERE IS SUCH A THING AS INFLATION, I f any thing talks about such a long term investment but does not account for that then it is utterly worthless as you example above is.


also
Quote:
For wages paid in 2011, employees pay 4.2 percent and employers pay 6.2 percent in OASDI taxes
not 15%

also once you consider inflation, what is $1200 per month in 49 years? .............. probably less then $3000 today which your "investment" lists plus you would have taken on significantly more risk

note the other bad comparison, you did not compare the average workers salary or income but yet used it as a comparison to your hypothetical person
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Old 07-24-2011, 09:07 AM  
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Originally Posted by Eddie_T View Post
I think the writer is seeking an unmolested SS Trust Fund that bears interest. Though he may be sincere I think he misses the point that if the Trust Fund bore interest it would either have to be paid out of general revenue or as a part of the deficit/debt.
So is SS a real investment?

This from How Stuff Works:
Quote:
The idea at the time was that people currently working would pay into the system, and their money would immediately go back out in the form of benefit checks. Each generation of retiring workers would get paid by the people currently working, and therefore the system would fund itself forever despite the fact that the system had no money to start with.

This clever idea worked great in 1935 (and for many years after that), but it is going to have a problem in the future for two reasons:

In 1935, there were many more people paying into the system than those receiving benefits. The ratio of workers to retirees meant that workers did not have to pay much into the system in 1935 to support the retirees (this table shows that up through 1950, only 2% of income (1% employee, 1% employer) was withheld for Social Security, compared to 15.30% (7.65% employee, 7.65% employer) today). In the future, the retirement of millions of baby boomers will hurt the ratio -- there will be so many retired people that the working people will not be able to support them. If the population had grown steadily this would not have been a problem, but there is no good way for the design of the Social Security System to handle a population spike like the baby boomers.
Many people have become so used to the idea of a 401(k) plan (where your money belongs to you and grows to a large sum over time through investment compounding), that the idea behind the Social Security system becomes hard to swallow. Currently a worker pays 7.65% of his or her gross income into the Social Security system (with a cap at a gross income of around $70,000), and the employer pays another 7.65% for the worker as well. If you could take that 15.30% of gross income and invest it in a 401(k) plan for the same period of time, it would generate an immense sum of money based on historical returns -- far more than a person with average income (or greater) would get from Social Security. A retiree's Social Security benefit is calculated using a complex formula rather than an account balance, because there is no "account" in the traditional sense.

You might have heard that the Social Security system currently takes in more money than it pays out in order to try to handle the baby boomer problem. What happens with the excess money the system collects? The Social Security system buys U.S. Treasury bonds with the surplus. Essentially, the government (in the form of the Social Security Administration) loans the surplus to itself.

In future decades, when it comes time to start drawing on the collected surplus, the government will pay itself back through tax revenue (or additional borrowing). The Social Security system will start cashing in the bonds, and the government will have to make good on them with tax revenue. That sounds weird because it is weird -- Whether or not it will work is a source of significant debate right now. The effect it will have is that it will shift the payment of Social Security benefits over to the government as a whole. The government as a whole, rather than the Social Security system, will have to repay the treasury bonds that the Social Security system will be cashing in. It will certainly be interesting to see what happens!
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Old 07-24-2011, 09:46 AM  
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2011 Social Security tax rate and maximum taxable earnings

Quote:
For 2011, the maximum taxable earnings amount for Social Security is $106,800. The Social Security tax (OASDI) rate for wages paid in 2011 is 4.2 percent for employees and 6.2 percent for employers.
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Old 07-24-2011, 11:45 AM  
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Quote:
I think he misses the point that if the Trust Fund bore interest it would either have to be paid out of general revenue or as a part of the deficit/debt.
From The Heritage Foundation:
Quote:
How Trust Fund IOUs Would Be Repaid.

At some point in the future, probably starting about 2018, Social Security will start to pay more in benefits than it receives from payroll taxes. At that point, it will begin to cash in the bonds in the trust fund. According to the most recent trustees report, Social Security will cash about $5.7 trillion (in 2004 dollars) in special-issue bonds, cashing the first special-issue bond in 2018 and the last bond in 2042.

According to the OMB, there are only four ways that Congress can repay these bonds: raise other taxes, authorize the Treasury to borrow the needed funds from the public, reduce spending on other federal programs and use the savings to redeem Social Security's bonds, or simply reduce Social Security benefits. None of these options is easy or attractive.
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Old 08-04-2011, 06:30 PM  
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When I received my IRA statement I noticed that my $8,000 contribution had grown to a figure that could buy an annuity of $1200 per month which rivals a SS payment. Admittedly it won't buy that same annuity this week but SS is not so solvent either (it's still a Ponzi Scheme).
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Old 08-05-2011, 09:10 AM  
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Quote:
Originally Posted by Eddie_T View Post
When I received my IRA statement I noticed that my $8,000 contribution had grown to a figure that could buy an annuity of $1200 per month which rivals a SS payment. Admittedly it won't buy that same annuity this week but SS is not so solvent either (it's still a Ponzi Scheme).
I call b.s. unless you are being overly vague, $8,000 over what period or 8k total, usually an amount of $xxx,xxx buys an annuity, not 8k or 8k over an unspecified time frame.

DETAILS, not vagueness
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Old 08-06-2011, 12:04 AM  
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Originally Posted by RedJeepXJ View Post
I call b.s. unless you are being overly vague, $8,000 over what period or 8k total, usually an amount of $xxx,xxx buys an annuity, not 8k or 8k over an unspecified time frame.

DETAILS, not vagueness
$8K grew to $160K.
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