What is the pay back on a person's OASI contributions? I have posted these numbers based on average income earned, but apparently a few have no looked at them.
However, to make it more personal lets look at what my father paid and receives. He began paying OASI in 1949 and paid the maximum until 1986 when he took early retirement. His total contributions including employers contributions total $40,770 earning the US treasury rate for each year would total $98,134.44.
What would this amount earn as an annuity? A 25 year annuity adjusted for inflation would be $6,102 a year. A 20 Year annuity would be $7,094. However, OASI paid my father just over $8,000 a year even with a 20% benefit cut for early retirement.
But wait, that is not all. He paid $4,826.15 in medicare tax which would also provide $600 a year in medical insurance premium. However, Medicare paid out just over $4,500 a year in 1986.
Does this answer everyone's question about how good a deal it is. Keep in mind a non working spouse will draw 50% of my dad's benefits or $3,547 a year along with another $4,500 in medicare benefits. Boy what a great return he got and he paid the maximum. The question is what kind of return does the lower wage person get? Since the person who paid the max only gets about 15 to 20% more in benefits than a person making half that wage, the ROR for them is at least 80% more. We are then looking a ROR of greater than 15% a year.
The simple fact is, it does not take 18 years to get back what one has paid in to OASI. It will take ever more time for those retiring in later years. In fact those who retire after 2035 will never get back what they paid in if the pay the maximum!
Now lets assume they pay only 75% of benefits. This would reduce everyone to a zero or less ROR in later years. It would be better to burn 10% of your OASI tax and put the rest under your mattress than to pay OASI!
Now lets increase the age of retirement to 70. This will also reduce the ROR to zero for most people and if it can only pay 75% of benefits or less, you might as well burn 20% of your OASI tax and bury the rest. You would do better than what OASI will pay.
Now do you understand why I as a baby boomer, father of five is so adamant about eliminating Social Security? Who would want their children to be enslaved by such an evil program?
As for why Sucopial SEcurity was started, it was not started because people had not been saving. It was started because the work-ethic-contract had been broken. Before Social Security there was an unwritten contract between neighbors, friends and family that if anyone became disabled or died, the others would do what they could to help out. However, when the depression hit everyone was in the same boat and no one could help each other. Savings were wiped out. People believed if they worked hard and saved they would be ok.
This is complete nonsense that people did not save. They saved more than todays generation! They purchased houses in ten years not 30. They were more frugal than todays. Granted not all saved, however, to punish the majority to satisfy the minority has never set well with me. Furthermore, for those who think without Social Security we would sent thousands into poverty think again. What are all these billions we spend each year on welfare, medicaid, and food stamps? We currently have a need based program to take care of these people.
All I am asking is retirees use up their resources before asking me for a handout and then that handout is not going to let you keep a $100K house nor your new car, boat antiques, etc. It will provide food and shelter, but little more. If you make it to comfortable, you will have too many not saving at all.
As for the co-worker who stated "Save Social Security - Stop feeding the old people", wake up to the fact there is a growing population under 30 which truly despises the old because of Social Security.
As for pay back in 18 years, ask Social Security for your earning record. I proposed to congress over 20 years ago that with each Social Security check, the amount paid into Social Security be printed along with how much has been received in benefits. However, this has not been done. I guess the government did not want to spoil the party. However, you can easily figure it out.
For those who want the interest rates paid to Social Secuirty from 1937 till present you can get them from
Use these numbers, your earnings base, and OASI tax rates to figure out how much you would have earned and then use this gradient formula for determining annuties adjusted for inflation
