Originally Posted by Texarkandy
In either case you can see why the 30 or 37 year federal worker doesn't consider his/her Social Security as "insurance" or "welfare"
I did not intend to demean people who rely on SS, either entirely or partially. Heck, I just ran FireCalc again with SS entered in for ourselves at 62, and it sure helped
What I meant was that SS is not the same as other true retirement funds, in that if person A contributes twice as much as person B, then person A should get twice as much benefit. The higher-income workers end up subsidizing the lower-income workers. To check this out, you can download the SS benefit calculator to play with different scenarios to see for yourself.
If I remember correctly, Cato Institute had a calculator that shows how much benefit you would have in retirement, had your SS contribution been invested in S&P500. It was much higher, as I remember. Perhaps even double.
Now, I do not say that we should not provide for our elderly lower-rung citizens
. But the government does not want to separate out what is your deserved portion, and what is a tax to help others. In fact, it appears politicians like to obfuscate this fact.
I always have worked for megacorps with 401k with $10K yearly contribution (it was upped in recent years). But it irked me when I saw that people who work independently or for mom-and-pop businesses could only contribute $2K/year (until recently) in an IRA. But professional workers (lawyers, doctors, etc...) could have Keogh plans with even higher limits than 401k.
Why such disparity for different workers? Is it because privileged groups have lobbyists working for them, while the average Joe/Jane is left with no advocates? In fact, the common 401k was originally intended for the executives to defer taxes on their bonuses, not for the lowly employees like myself to participate. It was the work of Ted Benna who brought the 401k participation to every worker.
So, you see, perhaps it was not intended for Joe/Jane Blow to have anything other than SS as the vehicle for retirement savings. But people want to have ownership of their own retirement funds, and they have found ways. Sadly, many people still think of SS as their sole source of retirement income.