YOUR OPINION: Social Security myths endure
Thursday, December 9, 2010
American workers are great savers whether they can afford it or not. Social Security takes 6.3 percent from their paycheck and their employer pays another 6.3 percent for a total of 12.6 percent.
If the worker makes $10 an hour or $20,000 a year, works from age 21-67, and retires at 67, his yearly $2,500 compounds at 5 percent to $484,872.
If as a retiree he collects $20,000 a year which is well above today’s average it would be less than the $484,872 would earn in interest at 5 percent by $4,243. The $4,243 compounded with the $484,872 for 19 more years — assuming the worker lives to 86 the lifetime average — would amount to $617,844. After the worker dies this $617,844 would continue to compound
That is why today the Social Security fund has trillions in spite of the low amounts paid in previous years.
In this example workers contribution if compounded for centuries could buy the solar system.
This merely shows the lunacy of theoretical projections so popular with the Republicans.
They are not alone in perpetuating erroneous information. Even the AARP includes in pie charts of federal government expenditures Social Security which is not paid from the federal income tax but is separately funded.
These individuals who mislead may well feel their positions would be threatened by groups clandestinely supported by employers not wanting to pay 6.3 percent or those wanting to dip into the Social Security treasure trove.
To add insult to injury millions of retirees pay billions in income taxes on their pensions by their pensions being taxed by the federal income tax.
This money does not go into the lockbox but into the general revenue to support the government.