18 April 2014

Negative rate of return

Well that's thoroughly depressing.  I just went to ssa.gov to see my estimated retirement benefits as well as contributions to date.   I have been working and paying into Social Security for some 30mumble years.

Lets assume I retire tomorrow so I am no longer contributing into the system even though I'm well short of retirement age. I'm fully 40 quarters vested.  Under the best case scenario and I wait until age 70 to start benefits and lived to 90,  I would get back less than 58 cents of every dollar I have contributed over my producing life.  I will have to live to 104 to break even.

Stand by while I consult the magic 8 ball.  "Not Optimistic"

But that's only half the story.  My employers have matched my contributions plus a little bit I don't understand.  That means given the total contributions by me and on my behalf, I will net ~28 cents for every dollar over the same time period.  I'll have to live to 141YO before I break even (again assuming the most optimistic scenario where I stop contributing today and start collection at age 70)

Re-consult magic 8 ball: NFW!!!

I've said for years, I would walk away from my all my SSA contributions todate if they would let me opt out. My calculations show the contributions I will likely  make more contributions in the next ten years that will exceed any withdrawals.  Another way of looking at this, writing off my past thirty+ years contributions + my employer's contributions.  Put my sole contributions into an account with my name at 0% interest,  I still come out ahead on day one!  Add in the employer contribution and I come out way ahead!

Now FedGov wants to sell me into MyRA?  See the negative rate of return shown above!  You have proven you can't manage my money.  Why would I trust you with my next dollar let alone everything
savedtaken over my working life?

I weep for the SCSon's generation.

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