Tuesday, May 8, 2012
Social Security vs. Private Retirement
Professor Anthony Davis is on a roll. In this video, he points out that even a retirement plan that forced workers to invest their Social Security payroll taxes only in Treasury bills would generate 17% more in retirement benefits than the current system, which is also subject to change by Congress at any time.
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I'm not sure about this. An annuity for a 65 year old male today pays about 5.8%. To get $25,000/year would require approximately $430,000. The professor says the average worker getting $25,000/year has paid in $216,400. And he gets disability and a payout for the kids in case the parents die!
ReplyDeleteThe math on social security is always tricky and one of the reasons that make it hard to evaluate verses private savings vehicles. If you die young with spouse and dependents or become disabled young the insurance aspect is certainly superior to private savings. Demographics will make social security a pretty lousy deal overall for our grandkids should they make it to retirement. But then everyone in social security is beholding to and at the mercy of politicians and faceless bureaucrats for their future benefits.
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