Poll: What is your SS payback period?

[pb4uski]

That's the beauty of the first amendment... anyone can have an opinion.. but it is not strange at all. Payback is typically measured by what you paid divided by annual benefits.... what you get out in relation to what you put in.

In this case, what someone else does (your employers' taxes in that case) impacts what you get out but that is neither here nor there. If you are self employed then what you put in is double.

Also see posts #41 and #45.

....what rate of return would you need to have in order to be glad to have chosen to have all those wages taken from you for all those years?

See post #13 for IRRs.

... I have done a separate analysis of my IRR by taking my taxed SS earnings times the tax rate in effect for those years to reverse engineer my total SS paid by year as cash outflows and then added my benefits starting when I started SS at age 70 and calculated an IRR given those cash outflows and inflows if I live to certain ages assuming 2% future COLAs. See table below. So if I live to 82-1/2 (average longevity) then my IRR is 6.0%... pretty good I think... but 3.0% if one includes the employer share... still not bad.

So the IRR incorporates the time value of money but in a different way. It solves for the breakeven time value of money given the presumed cashflows.

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[Gumby]

... If you are self employed then what you put in is double.

Does that account for the fact that the "employer" side of the SS/MC withholding is deductible?

 

[pb4uski]

No, because in this case outflows and inflows are both pre-tax.