Is Social Security
a good deal? Many Americans worry that they will put more money into
the system via payroll taxes during their working years than they will
ever get back in benefits — and their concerns help fuel the ongoing
push by Republicans to transform Social Security into a privatized
system of personal accounts.
Mitt Romney has supported privatization in the past (see his book, "No Apology"), and running mate Paul Ryan argued for it as recently as last week's vice presidential debate: "Let younger Americans have a voluntary choice of making their money work faster for them within the Social Security system."
Mitt Romney has supported privatization in the past (see his book, "No Apology"), and running mate Paul Ryan argued for it as recently as last week's vice presidential debate: "Let younger Americans have a voluntary choice of making their money work faster for them within the Social Security system."
Could
workers make their money grow more quickly with personal accounts? The
actuaries at the Social Security Administration (SSA) ran an analysis
recently that simulated real (after inflation) annual rates of return on payroll tax contributions for beneficiaries who were born between 1920 and 2004.
It
showed that some workers might beat Social Security's returns in some
years if they took risks in the stock market. But over a lifetime,
Social Security's consistent, risk-free and inflation-adjusted returns
would be very tough to beat.
These
results are "simulated" because the amount of your Social Security
benefit is not based on tax contributions, but on your lifetime wage
history and longevity. Moreover, Social Security is not an investment
vehicle dependent solely on market returns — it is more like a form of
insurance, annuity or pension, since its promise is to pay a monthly
benefit amount no matter how long you live. In that sense, there is a
peace-of-mind value that is difficult to quantify.
Read more: http://www.cnbc.com/id/49476231
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