>>>>This is an important distinction, which deserves elaboration....
>>>>I'll take the government backed S&L; account any day.
Actually, that wasn't a distinction that I was making at all. The point was that 'investments' are not 'risk free' in any true sense. It is fine for you to put the liability off on the gov't, but consider these two facts: 1) Many of the posters here are upset by the gov't taking on an 'unfunded liability' in SS. Bank and S&L; deposit insurance has (and may again) resulted in such an 'unfunded liability'. 2) SS was born at a time of many bank failures and a stock market collapse to boot. Not predicting either, but who knows what the future holds.
>>>>I should have given the numbers up front. My assumption was an inflation rate of 2% and a bank rate of about 4%. So the return given for the bank account is over and above the inflation rate.
Thanks for the clarification.
My calculator shows a current dollar value of about $22,000 for the bank account. And that assumes you have the money UP-FRONT and earn on the $10000 for the full 40 years, which most don't have (and SS doesn't require). And of course, assumes no taxes.
>>>>The fact is the Social Security return is negative, taking into account adjustments to inflation. This is the real risk in Social Security: losing out to inflation.
Actually, SS is inflation adjusted. Also, you neglect the diasability and life insurance aspects of SS. And make no allowances for the spousal benefits that SS may pay. That changes the balance, but is more difficult to fit into a simple example.
