The following is a Facebook post that people are asked to share. This is unfortunate because it is completely inaccurate in so many ways, but too many people accept this junk and pass it along.The total Social Security tax rate is 12.4% not 15% and it has not been that level for the last forty years. 12.4% of $30,000 is equal to $310 per month, not $375. Nobody is going to earn 1% interest compounded monthly. In fact, if you could have invested the $310 each and every month (an impossibility given one did not earn the $30,000 their entire working life because it’s an average), it would take an annual return of over 8.5% to reach $1.3 million. Pension funds don’t even assume that rate of return.
Nobody took the Social Security tax money and “used it elsewhere.” The fact is, the government did invest our tax money in a low-risk interest earning account; one big account invested in US Treasury Bonds (about as low-risk as you can get) that currently holds about $2.8 trillion with an average interest rate of 3% now paying the Social Security Trust about $98 billion a year in interest.
But the real points that are missed in these limited knowledge memes are the most important.
- Social Security is guaranteed income not dependent on ones investments
- Social Security provides more than a benefit to the taxpayer; it provides for spouses, ex-spouses and children
- Social Security provides disability benefits way before the normal retirement age
- Social Security provides some inflation protection
- Social Security provides survivor benefits
There is one basic problem; the promises made by the law to current and future beneficiaries are not being funded. In other words, incoming taxes plus interest plus all the money now in the trust is not sufficient to pay full benefits for even the next twenty years. This means income to the trust must increase and/or the promises for future benefits must decline.
The Social Security check is now (or soon will be) referred to as a “Federal Benefit Payment?” I’ll be part of the one percent to forward this. I am forwarding it because it touches a nerve in me, and I hope it will in you. Please keep passing it on until everyone in our country has read it.
The government is now referring to our Social Security checks as a “Federal Benefit Payment.” This isn’t a benefit. It is our money paid out of our earned income! Not only did we all contribute to Social Security but our employers did too. It totaled 15% of our income before taxes.
If you averaged $30K per year over your working life, that’s close to $180,000 invested in Social Security.
If you calculate the future value of your monthly investment in social security ($375/month, including both you and your employers contributions) at a meager 1% interest rate compounded monthly, after 40 years of working you’d have more than $1.3+ million dollars saved!
This is your personal investment. Upon retirement, if you took out only 3% per year, you’d receive $39,318 per year, or $3,277 per month.
That’s almost three times more than today’s average Social Security benefit of $1,230 per month, according to the Social Security Administration. (Google it – it’s a fact).
And your retirement fund would last more than 33 years (until you’re 98 if you retire at age 65)! I can only imagine how much better most average-income people could live in retirement if our government had just invested our money in low-risk interest-earning accounts.
Instead, the folks in Washington pulled off a bigger “Ponzi scheme” than Bernie Madoff ever did. They took our money and used it elsewhere. They forgot (oh yes, they knew) that it was OUR money they were taking. They didn’t have a referendum to ask us if we wanted to lend the money to them. And they didn’t pay interest on the debt they assumed. And recently they’ve told us that the money won’t support us for very much longer.
But is it our fault they misused our investments? And now, to add insult to injury, they’re calling it a “benefit”, as if we never worked to earn every penny of it.
Just because they borrowed the money doesn’t mean that our investments were a charity!
Let’s take a stand. We have earned our right to Social Security and Medicare. Demand that our legislators bring some sense into our government.
Find a way to keep Social Security and Medicare going for the sake of that 92% of our population who need it.
Then call it what it is: Our Earned Retirement Income.
99% of people won’t SHARE this. Will you?
This Blew My Mind