No. of Recommendations: 7
Being a glutton for punishment, and having just downloaded my history from the SSA, I ran some numbers.
The total SS tax paid from 1963 to the last year I had a paycheck was:
Paid by you: $103,948
Paid by your employers: $104,740
Total: $208,688
If the annual tax paid had been invested in the S&P 500, the total final value would be $1,586,293.
If I then took out $2,500 a month, that would last 52 years, assuming no further net growth. For example if the growth was equal to inflation.
If it earned net 1% per annum, it would last 75 years.
If it earned net 2% per annum, it would last forever. "total is $2,120,620.62 after 100 years"
No. of Recommendations: 7
If the annual tax paid had been invested in the S&P 500, the total final value would be $1,586,293.
But you can't just "invest it" all. You also have to calculate the cost of the disability insurance each year from 1963 until now, let's say the first 5 years just for you, then the next 5 you and your wife, then the next 30 for you and your children, and then the remainder for you and your wife. You would only be able to invest the amount you would have paid each year MINUS the cost of all that disability insurance each year.
I happen to have my Social Security statement here and mine says:
Social Security taxes
You paid: $187,135
Employer(s): $194,680
Medicare taxes
You paid: $155,589
Employer(s): $155,589
Amazing how my Medicare taxes are almost as high as my Social Security taxes in total. And this doesn't include any of the NIIT Medicare taxes.
