To: Broken_Clock who wrote (90348 ) 9/24/2007 5:37:35 PM From: Lizzie Tudor Read Replies (3) | Respond to As for "But virtually ALL current retirees are taking out much much more than they put into SS" ...got facts? A comparison of the after-tax rates of return from the social security system with the average rate of inflation of 4.5 percent for the time period 1945-89 shows that the social security returns are very favorable. For 65-year-old couples, the nominal rates of return in Table 5 range from 7.11 to 8.97 percent for those with 1990 incomes of $100,000 and are even higher for those with incomes of $10,000, from 10.93 to 11.24 percent. Rates of return for all income levels are much higher than inflation. In general, the returns are not as high for singles as for couples with the same income levels because of the lack of spousal benefits.For 25-year-old couples (Table 7), rates of return range from 3.54 percent at $100,000 income level for a two-earner couple with a 50/50 split of income to 7.86 percent at the $10,000 level for a one-earner couple. In each of these age groups, the rates are lower for singles in virtually every case. Even after adjusting for the assumed 4 percent inflation, the 25- and 45-year-old contributors can expect positive real rates of return in virtually every case. Despite small differences, the real returns calculated from our nominal after-tax returns are similar to those calculated under somewhat different assumptions in Boskin, et al. (1987). cato.org
