Hi John,
actually, I made a mistake in my calculations. I assumed that the person did not dig into principal in their retirement years. I also, changed the expected return to just 6% per year, 3% after inflation to be even more conservative.
Here's my set of assumptions and the results:
Current Age = 21
Retirement Age = 67
Death Age = 87
After Inflation Return = 3%
Annual Earnings = $17,000
Annual SS Savings Rate = 12.4%
Annual SS Savings = $2,108
Principal on Retirement = $208,556
Monthly Retirement Income = $1,157
Expected Social Security Monthly Income using same assumptions = $816
ssa.gov
All of the above figures are in today's dollars, inflation adjusted. So as you can see, a lifetime of enforced savings in a private account is good for even the poorest of the poor. Drop in any number you want in place of the annual earnings assumption and the outcome is always the same. You earn more in a private account than in your gov't managed SS account. But even more importantly, the gov't can't legally take money away from a private account, but they can renege on promises in the current SS system. |
