Saturday, February 20, 2010

Friday, February 19, 2010

Some Social Security Math.

Just a point of reference for understanding what is reasonable in the discussing Social Security reform: under the present system, consider a person enters the workforce at 25, with a starting yearly income of $20K, an annual raise of 5% (inflation + merit), and an employee+employer deduction for Social Security of 12.4%, using the current cap of $106,800. Upon retirement at 65 the citizen will have a personal savings of about $290K. The retiree living to 85 will then have a monthly income from this savings of about $1210.

Now, allow this stagnant savings be partially invested (like the federal employee program) such that it results in an annual return of just 2%. The personal savings after forty years will be $390K, for a monthly income (assuming no additional growth) of $1625, more than 30% higher than the stagnant system. Assuming a 1% return on the savings will result in a personal savings of $335K. Of course, these calculations assume that the government didn't spend the money on something else, i.e., they didn't steal it.

The Rant Heard 'Round the World.

February 19, 2009: the day we finally said: NO! It's not about birth certificates, secret socialist plans, or all that other nonsense. It is about preserving the greatest economy in history by insisting on responsibility by individuals, corporations, and the government. The true message is not partisan, it's about accepting some very bitter medicine: serious and painful reform on all government spending, entitlements and otherwise, living with one's means, and allowing the market to reckon with foolishness.