There has been a lot of talk on the left and right about slashing pensions, medical benefits, and other retirement plans of folks who are already retired, or who have contributed into those plans for many, many years.
"I would like to see any Tea Party member cut their Medicare Card. Or not to cash their SS check. Or quit their government job (whether state or federal) or refuse any benefits associated with a past or present government job."You can opt out of the benefits, but not the taxes
"Federal, state, and corporate pensions should be substantially reduced if not eliminated entirely."
"A quick fix to all government budgets is to stop paying pensions and benefits."
"All pension should be abolished ! ! ! ! ! ! ! Including federal government." [sic]
These comments are not unique and are reflective of the problem with the progressive mindset. If you are against their programs, you ought to opt out... don't collect that social security check of which you are paying 6.2% (12.4% if you are self-employed) on the first $106,280 of income. Of course in the progressive mind, while you ought to opt out of the benefit, there is no opting out of the taxes. They seem to think that Social Security is some form of government largesse as opposed to a rather shitty return on a government mandated investment.
$252,246.35 in...
Let us perform a simple mathematical exercise on a hypothetical entrepreneur who started working at the age of 21 and who retires at age 66 on December 31,2010. This person, born in 1945 started working in 1966 and earned the maximum FICA taxable income through this period. This person, over his 45 year work history, would have paid $252,246.35 in Old Age Survivors Disability Insurance (OASDI) on his income.
The total is based on social security tables and breaks down all the payments, year by year. OASDI subtotal column used, because since 1994 there is no upper limit on what you are taxable on for Hospital Insurance (HI). In 1993, where the OASDI figure is $7142.40, our subject would have paid the maximum $3915 in HI, in 1994 there would be no maximum and our subject would have paid an HI amount based upon his total income. http://www.ssa.gov/history/pdf/t2a4.pdf
$269,724 out!
Now, this person who is 66 years old, if a white male, can expect to live to 75.6 years of age, that's another 114 months. The maximum benefit payout is $2366 a month for a total annual income of $28392, so in the remainder of his life (ignoring cost of living increases) the social security payout will be $269,724 presuming he gets the full amount without any income offsets. AH HA you progressives exclaim... evil white conservative guy is stealing $17,478.
What if you put the money in a bank account instead?
But compound interest makes it a more interesting story. If our subject wasn't very investment savvy and had simply stuck all that FICA money in a savings account at 1% interest, he would have ended up with $285,833.49, more than enough to cover his predicted withdrawals of $2366/mo and his heirs would have received $30,062 (remember, the principal keeps earning interest). Had he invested conservatively and received an average return of 4% when he retired his portfolio would have been worth $440,270 and his heirs would have received $299,960.34... as it stands now, the SSA pockets all that money (or they would if the government didn't play funny money games).
What if you invest it?
Suppose instead that our subject had invested all that money in stocks, from 1966 until the day he retired. The Standard & Poor's annual average rate of return from 1966-2010 was 10.95%, had our subject invested wisely his portfolio upon his retirement would have been worth $1,621,653.73 and if he continued to earn 10.95% interest and withdrew only the maximum allowable under social security ($2366), when he died the portfolio would have been worth $4,074,116.83. So you can see, your government largesse has screwed our poor fellow and his heirs out of $3,804,392.83
So instead of not cashing my social security check, how 'bout I fold it into sharp corners and shove it up your...
That's the problem with progressives, they take your money and expect you to be obsequiously grateful as they dole out the pittance they think you deserve.
Compound Interest calculated using:
http://www.moneychimp.com/calculator/compound_interest_calculator.htm
