No. of Recommendations: 2
Any Body ready to give up SS and Medicare so that they can live an unfettered, free
life ?? It's complicated.
At age 30, I would have said "yes" - forego any Social Security benefits in exchange for me not paying into the system and me keeping my company's contribution. The math on the rate of return is horrific for social security.
https://financialducksinarow.com/social-security-m...I've paid the maximum tax each year since 2001 and my employer has matched it. (The tax is 6.2% up to the max level of earnings, which you can see in the table).
So since then me and my employer have contributed a total of $322,000 (give or take).
Let's say someone would have offered me the following deal: I get to keep
half of what my employer and I contribute to SS for myself to invest - pre tax - however I see fit.
Had that money been invested in something that paid out at 3% year on year it would be worth $226,000 today.
Had that money been invested in something that paid out at 6% year on year it would be worth $325,000 today.
If I choose to work until age 70, and assuming the tax rate and max income limit stay the same for next 20 years:
At 3%: $653,000
At 6%: $1.34M
Assume I would live to be 94. I'd be able to pull out $27k a year for 24 years for the 3% and $55k a year for the 6% case.
Now. How much am I going to get in actual Social Security benefits? Maybe $24k a year, if the program even stays around.
We can do similar math on Medicare.
So, yeah. There's a compelling argument that for younger people who think they'll have high earnings for their careers that SS isn't a great deal. Obviously for some folks it is a good deal.
But we should have choices.
