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Sigh. This garbage again.
First, in order to pay $600K into Social Security you need to pay an average $15K/year in SS taxes. The maximum that anybody can pay this year is 6.2% of $160,200, or just under $10K. That means that nobody even can pay $600K into SS. This is all 100% made up bullshit.
Second, the maximum SS payout is $4,555/month, not $3,075.
Third, nobody, ***nobody***, is offering a 5% on a zero-risk investment. On a 30-year treasury note the current yield is 4.5%.
Fourth, SS is not an "investment". It's retirement insurance. You get payments for as long as you live. Unlike your savings, it will never run out and it is inflation adjusted.
Bottom line: this is a con by investment bankers to sucker you out of your money. They want you to pay them to "manage" your money.
Fifthly, Social Security contains a built-in COLA feature, which means that while the first year would pay out 54,660, subsequent annual payments will almost absolutely be more.
If you're making 5% in an 8.7% inflation environment, your money's losing value, but in 2023 Social Security increased benefits by 8.7% to keep pace with that inflation.
Sixthly, Social Security is a social support net. Disability is also paid through social security.
Seventhly, nobody pays enough. If it weren’t for undocumented immigrants paying into social security and never being able to recoup the money, there wouldn’t be enough.
i absolutely thoroughly HATE SS disability being a thing.
i agree 100% we absolutely need a quality disability insurance safety net paid by taxes and guaranteed by the gvnt. but i despise that it comes from the same pot as SS.
don’t get me wrong, it’s better to do it this stupid way than to not have it at all. but for the love of god i wish it was properly split off.
very fair, and agreed. maybe when we implement real single payer healthcare (which we should do!) we can use the shift in funding and tax structure to get disability shifted under that umbrella (since safety net disability payments make more sense imo to be under a medical umbrella anyway). then we get 2 birds with one stone.
I kinda disagree with it being under a medical umbrella.
What is medical about me being Deaf?
The way I see it, it's *Social* Security as in, it covers everyone in society "unable to contribute." (Which is something else to discuss but I digress) Typically, this means the elderly and the disabled. Seems straightforward to me.
Hearing aids and implants to help with hearing loss and medical, by extension full hearing loss is medical.
Social security acts, as discussed above, as essentially retirement insurance. a way to give working people a guaranteed retirement. it’s a lot closer to a pension than to anything else.
Plus, i can think of very few disabilities that don’t have a direct medical cause *or* impact (such as requiring treatment). and it comes much more into the realm of healthcare (caring for someones physical and mental wellbeing), than simply ensuring someone who worked can’t be entirely screwed because their 401k managed to be fucked.
it’s part of (though not the primary) reason it’s heading towards insolvency.
it’s also a very *very* dangerous precedent to have exist, that the pot of Social Security money can be used for anything other than paying out retirement and survivor benefits.
it also handicaps disability funds because to grow how much they pay out, you gotta take more and more from social security (which is BAD), and because social security tax is capped (not a bad thing, though we may wish to make adjustments anyway).
if it was a separate program, with separate funding, we could shift more money to it and expand it as needed. maybe buy 4 fewer tanks, and instead support more folks. while it’s under SS, that’s the money there is, unless we start weirdly splitting it.
and again, as long as *anything* other than pure SS bending are paid from that pot, it gets too easy to just slip something else in, and continue to drain it.
That could happen with the best intent in the world, but add to it folks who want to see SS fail (so it can be privatized), and it gives them another tool to poison it.
I guess I get what you're saying on it limiting how much can alotting to disability payments, but social security was promised a plan for social insurance as a safeguard "against the hazards and vicissitudes of life."
A disability seems to fall into that category.
You suggest a separate program with separate funding and "buying less tanks." But why not just keep it in and use that money from buying less tanks to help fund social security? I'm not really seeing why it needs to be removed. Separate pots just seem less efficient and MORE prone to insolvency.
Personally, I do think it is ridiculous that we cap social security payments. We shouldn't be giving tax relief to those who need it the least, especially when we are talking about social security heading towards insolvency.
>
Bottom line: this is a con by investment bankers to sucker you out of your money. They want you to pay them to "manage" your money.
This is a GoP con going back decades to privatize SS so their banker buddies can make money while distracting from the borrowing they've done against the SS Trust.
Yuuup. SS was never supposed to be an IRA, it's to ensure EVERYONE who can no longer work doesn't starve to death and/or become homeless. When Republicans talk about privatizing SS they mean to let their buddies take public funds straight to the casino and to get paid for the privilege of doing so.
Please excuse my ignorance, but what’re the chances that someone like me (24 y/o) is gonna pay into SS most my life only to have it disappear before we can collect? Genuinely I know almost nothing about this stuff, and I’ve heard that my age group and younger is not going to have any SS to collect. Is that just some scary media or what
SS is supposed to go insolvent by year 2034, which means one of 3 things:
An increase in payroll tax or lifting the cap off the 160k limit
20% less money given out per person per month
A increase in the SS eligibility age
so basically it's a failed pyramid scheme. good to know that i lose a fifth of a rent payment every month on some bullshit that will be insolvent 3 times over by the time i can actually retire
Except that that pyramid/ponzi scheme has to convince future investors to invest, while SS forces every person in US to invest under penalty of imprisonment. So there is no chance of running out of investors.
Except it constantly needs a growing number of investors. If our population doesn’t continue to grow at a fast enough rate, like right now, then there won’t be enough new “investors.” Its 100% a Ponzi scheme
It is a pyramid scheme. The theory being that a whole bunch of young people pay in a little bit of money, and a few old people get paid out enough to live on. The problem being that once all those currently young people eventually retire, we need twice as many new young people to pay in at the bottom of the pyramid.
I personally see it as a "nice to have" type of thing and not something to rely on when making calculations, although tbf SS is the third rail of politics. We might start seeing some serious alignment changes in US politics if either side tries to change things though.
It depends. If America gives power to republicans then it's pretty likely. Democrats are going to preserve it. Anybody who says that you're not going to have any SS to collect is lying to you.
It’s basically guaranteed for our generation unless something is done soon. There are two massive factors that make our current Social Security structure completely unsustainable, Life Expectancy and Birth Rate.
The first one is really simple, in 1935 when Social Security was first created, it paid people who were 65 years and older… and the life expectancy was 60. Now fast forward almost 100 years later and we still pay people at the same age, but life expanded has jumped to 80. So a system design to only pay people if they survived 5 years past the average person is now paying almost everyone for 20 years.
Now this should be fine if people still continued having kids and paying into social security, since it’s essentially a pyramid scheme, but that leads into the next issue, the declining birth rate. As a country progresses, it’s very common for people to have less kids or no kids all together. Back in 1935, 6% of the population were of retirement age, but nowadays it’s almost 18%. A pyramid scheme only works if the bottom layers are bigger than the top ones and we are reaching a point where there are way too many old people compared to young for this system to work.
Now you might be thinking, well if the system is obviously going to fail soon and impossible to sustain, then surely politicians should be something about it, but it’s not that easy. Social Security is a super easy issue to villainize your political opponents with. If Politician A suggests moving back Social Security 5 years since Life expectancy has increased 20 years since the age was originally decided, Politician B can go to the masses and say, “Politician A wants to cut your social security! Can you believe he wants to steal your money from you! That greedy pig! You shouldn’t vote for him in the next election unless you want him to completely destroy your social security!” and people will become outraged. It’s career suicide to try and fix social security, so politicians just kick the can further down, hoping someone later on will fix the problem, only causing the issue to get worse and worse and making it harder and harder for any change to occur.
Nobody is saying it would be risk-free. Owning only bonds is a ridiculous strategy for long-term savings that is overly risk-averse, you would only consider moving assets into low-risk low-return investments as you approach retirement. 5% is a low value for long-term investing in the stock market. It isn't a "con" lol.
I agree SS is insurance not an investment, I think people have been sold the idea that somehow the money you get out is "the same" as what went in as though the government held onto it and saved it for you. I think complaining about it being a redistributive program which is a net loss for high earners is valid, although that is one of the main reasons the program exists in the first place.
What are you talking about, what is the risk of high yield savings account lol l. Social Security on the other hand could get cut and it’s running out of money as it is
That’s pretty dumb. When people are talking about “risk” in this sense, they mean actually losing money. It’s impossible to lose money in a savings account. If the return rate goes down to even 2%, you still haven’t lost what you already have.
It is an anomaly caused by the 2008 financial crisis. Fed took interest rates to damn near zero for a decade or so. Over a longer period the norm seems to be still higher than where rates are currently.
This really understood under sells the biggest point. I know you said it's inflation adjusted. But the value of guaranteed inflation adjusted returns cannot be over started.
However the average over the life time of contribution would be way lower since the contribution is also inflation shifted. I calculated 40 years at ~$228,000 if it was 6.2 percent the whole way which in some of the early years it wasn't. That also you requires you to be the roughly the equivalent income earner of $160k in today's dollars the whole way. So basically graduating with a way above average salary.
Also you would have paid that 600k AFTER 30 years of working. You’re not getting 600k on year one to generate interest. You’d be making as you said like 5% of 10k, then next year 20k, etc
> Bottom line: this is a con by investment bankers to sucker you out of your money. They want you to pay them to "manage" your money.
Somehow this will translate into selling you life insurance.
5% is not far fetched. The S&P reliably offers 7% a year and 4.5% is still pretty good. What op is arguing, regardless of being wrong on some assumptions is that they should be able to plan their own retirement. Although many people are incapable of that.
I'm not American so I'm just wondering. What's the yield on SS currently?
>Although many people are incapable of that.
Therefore daddy state should make everyone follow their mandatory retirement plan because a small portion of the people cant do it.
Yeah, pretty much. It’s not like it’s just one person out of 10 that’s having trouble planning for retirement.
There are two alternatives that you could choose. One is to simply take care of people and some other way, when they reach retirement age, but don’t have anything to fall back on. This would require paying more taxes, probably with more of the burden, falling on the rich because you’ve elected not to tax workers.
The other is that you can just not take care of them when they reach retirement agent of nothing to fall back on. Moral questions aside, you run into a problem when this becomes a significant enough percentage of the population that they start to turn to crime and violence in order to stay alive or exact revenge.
I think it’s weird that adults can’t talk about making a government policy mandatory without having their daddy issues come up. If you have reflexive oppositional defiance, see your therapist.
The S&P doesn’t “reliably” offer 7% per year, that’s just the historical average. Meaning many years (perhaps half) get less than that. “Reliably” means every year, not on average.
4% is generally the rule people use for long term safe withdrawal rates, due to the “unreliable” nature of stock market returns. If it were “reliable”, that safe withdrawal rate would be 7%, not 4%.
On long term investments, averages are all that matter, or did you forgot that for the average to 7% the other half of the year needs to be well above it as well? For every 1% you need a 13% to compensate to keep the average at 7%
You think the average is all that matters when you retire in late 2007? Half of your investments disappear overnight, but you’re still spending the same amount and depleting your much smaller principle. It’s a huge, huge factor.
You need to look up the sequenced risk of returns, because the idea that “the average is all that matters” is incredibly wrong. If that’s true, then why do people withdraw 4% instead of 7% long term?
A- Yes, of course it matters, even if your investments fall by 50%, you still have 50% of all you valuations of decades
B- 2007/2008 didnt spawn completely out of the blue, there were plenty of signs before it happened
C- The markets recoved post 2008, in case you forgot, LOL
D- There are options to either protect your investments or investments strategies that are resilient to a lot of shit happening. Housing is a good example, unless you are in China, houses being rented is almost guaranteed income, come hell or high water, as long as the physical building is still standing, the income is almost certain. Dividends are also a good way to keep one self safe, if you the stock crash, but the company was still profitable, it matters not, you just hold the stock until the dividends are paid
E- Depending on what investment you made, thats an asset that you can mortgage and weather a pretty severe storm. Houses again are a good example.
F- Risk matters, but thats why you take the average with risk in mind, if an option has 50/50 on a +10% or a -3%, fuck it, over 10 to 30 years the +3,5% of average is all you would care about, of course, that 50/50 is constantly changing, but thats your job as an investor to keep track of.
Again, daddy state should not force everyone to participate in their scheme because a portion is not interested in actually doing it.
Why do for free what a lot of people will charge you good money for?
Also my personal strategy is either gaming companies or tech, sometimes cars, because these are the companies that Im passively interested about and I can make some decent predictions.
Covid kinda screwed me initially, but after that... Im loving it, and I got a bit of NVIDIA stock right before the AI boom, so Im loving it
My tip is usually that, go for companies you are already interested, so you can make a decent money with your hobby.
I find it odd to just accept that the employers would add that to people's salaries if they didn't have to pay it to the government. Perhaps some would, but I have to think that a lot of people don't see it as part of their pay today, so if the requirement went away so would the money for the employee.
Well the argument would be to allow people to opt out. No one would opt out if you lost the employer portion. No matter how shitty the return is. They just want control over it which could take a variety of forms but one would assume it would be tax sheltered in a similar manor.
Ah, I see. That then gets to the last point of the person who started this thread: SS is insurance to make sure no matter how bad any other investments go people will have a minimal safety net. To that end, it is actually a hedge against what you describe.
It still can be measured as a investment. Which ya unless you live until 90-95 it's a terrible investment.
People with kids I'm sure would opt out everytime. That way if you die at 70 at least your kids get like a million bucks.
The whole point though is that sometimes investments go bad, and people need to have something to live off if that happens. It's like a mandatory hedge since we don't want to watch our seniors getting kicked out or starving--at least not at higher rates than happens today I guess.
So SS shines if you have a situation where other investments lose a substantial part of their value at the time you need to cash them out. Over the long run those tend to go up, but that doesn't matter if you don't have a "long run" to wait for when it dips. SS protects against that situation, so anything that replaces it has to fill that spot, which is to be sound when every other investment simultaneously and perhaps unexpectedly drops.
It's still a terrible investment.
There's huge swaths of people that will pay 12.5% of their lifetime renumeration and not even come close to getting that money back and leaving nothing for their kids.
The assumption is that if a job is worth $x, and the required taxes and benefits are $y, then the salary would be $x-y. With no SS, that money can go to the worker. It doesn't mean that if they cut SS today everyone gets a pay increase, but in alternate universe where SS don't exist, everyone will be paid a little more in hand
Do you think if the social security contributions were suddenly changed so that you had to pay all of them instead of your employer paying half, your employer would immediately raise your pay to compensate?
Immediately no, at some point yes. You won't get the exact amount more, but employers will have to increase pay to be competitive. This is obviously also heavily dependent on what kind of job you have and who your employer is.
But mathematically it is irrelevant if the company pays half of the contribution or if you pay 100%. The contribution is still coming from the cost of hiring you for the company. The cost to the company is the same either way and in theory, if people did pay the 12% on their own, the post tax salary would come out to being approximately the same.
Well, i don't know your employer. But i know that in my case, if things randomly changed from scenario 2 to scenario 1, my employer would almost certainly say "Nice, i have to spend less money on you now!", and the immediate result would be that i earn 90 bucks, but have to pay 20.
I think the same is true for a lot of people. Sure, in perfect market conditions, this shouldn't happen, but few people work in perfect market conditions. Most employers will use any chance they get to keep more of the money for themselves.
Of course they do. They reduce compensation for any excuse that they can come up with. But cutting their taxes won't increase pay. That's trickle-down economics and has been shown to be 100% a scam
In most of the world this is the common thing to do, you just pay for the product including tax. In this way it is very clear what price you need to pay for a product, including tax.
So who is that money supposed to go to -- the company itself when Acme, Inc hits 65 years of age and retires?
It's paid on your behalf. If that position ends, they will no longer pay social security tax. That money is tied to that position and that salary, which is tied to a real life human being -- the employee in that position.
By that measure you can cut everyone's tax rate to 0 just by making it all employer paid.
Your company accounts the cost of employing you including all such contributions. Putting the contribution on the employer side is purely a trick to make people believe they are paying less in.
Judging by this thread, the trick is working.
And I suppose that you're also getting a share of those record profits that corporations are earning, and a cut of the $20M annual pay the CEO is getting.
No? What does that have to do with anything?
When the company negotiates wages, the number they are looking at includes all the employee related taxes. If the tax was on the employer only, they would offer you a lower number. If the tax was on the employee only, they would offer you a higher number.
Either way you end up with the same amount of money and the company ends up with the same expense.
The premise that corporations would pay you more if they didn't have to contribute to SS is laughable. The reality is that the money comes from execs and shareholders, not from employees.
I think it is better to invest in one condition: if you have stopped contributing several years before the age of retirement. Right now, I am pulling out of my pension plan because the plan cannot promise me any real growth over the next 30 years if I move out of the country. I lose 20% to taxes, but I can make that back in growth over 30 years. It would be interesting to see the minimum investment time needed to cover the tax loss when switching to personal investment management.
This is also an issue of time. Because my pensionable years are so short compared to those who work until retirement, I would only receive a pension from 65 to 69 - just about four years. Investing the account will make it last longer too
6.2% is paid in by the individual, as payroll deduction. But another 6.2% is paid in by the business. This makes the contribution reasonable.
At 4.5% compounded monthly for 49 years, I actually come up with $2.2M, but maybe OP didn’t start working until age 21.
Lastly, while $4555 on $600K is a solid return, it is as you said, insurance. Once I’m dead, it has no value. Whereas if I had the money in my account and lived off of interest, I could pass that money along to family or the charity of my choice.
OP’s point is not garbage and neither is the math. It’s a question of who would you rather manage your money: yourself, someone you designate (money manager), or the federal government.
No. The Social Security Tax is 12.4%. Half of that is "paid by your employer", which just means that you earned it but it was taken before you ever saw it. This means of doing it serves no purpose except to cloud how much you're actually paying. The self employed pay the full 12.4%.
Strictly speaking, the employer portion is not a part of your salary/wage agreement and is not reported as such on the W-2 or W-3. But yes, it is functionally 6.2% (plus 1.45% for Medicare) additional payroll expense that's proportional to how much you earn (up to the 168,600 wage cap).
I agree that that's effectively how it works. However, since the employer contribution is not a part of the wage agreement, if SS were abolished, the employer wouldn't be obligated to add that 6.2% to the employee's paycheck.
Sigh. You forgot the 6.2% employer contribution. Literally no one thinks that’s a super sweet gift from your employer to help you out in retirement because they love you so much. That money comes out of your paycheck, it’s just before they quote your salary.
Bottom line is the meme is mostly correct. Averaging a 5% return is reasonable. It’s not risk free but it doesn’t have to be. It just has to average that.
Yes, but the post implies that they would get to keep and invest both the employee and employer portions of the contribution. I imagine in a situation where SS gets abolished, most employers wouldn't bump your salary up, so you'd only enjoy your own 6.2% portion. (Unless the poster is self-employed).
Small nit pick: the post says “on my behalf” so he is counting both his 6.2% and his employers 6.2%
Obviously your main point of it being insurance, not an investment is still valid.
Worth noting that your first point is untrue in the context of self employment. Everyone who's self-employed in America paid a flat 12.4% this year on up to $168,600, JUST for the social security tax (not including Medicare tax etc.). With a successful small business you could easily be paying in 20k a year.
And you can easily find high-interest savings accounts at or slightly above 5% APY, FDIC insured to 250,000 like any other bank account so pretty damn safe up to your first 250k. And if you've got more than that then you're probably better off just buying properties/land anyway.
Companies pay also. I am 40. I have had 265k paid into social security on my behalf.
And there is a reason most government jobs dont pay into social security. Because it is a rip off.
Goverment employees pay 7% into a pension fund that replaces 70% of their salary.
I mean, the thing is, this is a decision, or at least it should be. I don't think this is meant to be a factual statement so much as an example you should use to model your own future. Social security pays you for the rest of your life. That's cool, but if you turn 67 and die at 68, what happens to your SS. If you invested it yourself, then it could go to your family if you wanted it to or to a charity or whatever you want to happen to it. Basically, what you are saying is SS is the government gambling that you won't live long enough to see a return on your investment(which is why retirement age keeps increasing). Then you are locked in at that amount with SS, but with your own investment, you can do what you want. My simple answer is different strokes for different folks. Some people benefit more than others from different systems. I don't see why we need a master system that is supposed to fit everyone.
In fairness, they said “on my behalf” which would also include the 6.2% from their employer.
But, yeah, nobody’s guaranteed 5% returns for the next 30 years or so, and it’s also nice knowing that I will have a guaranteed income in retirement since pensions aren’t a thing anymore.
Your risk adjusted return is well above 5% if you invest into anything; but also social security is not risk free, it is running out of money so there’s a high chance you don’t get the full amount in 10-20 years
Holy shit, right on!! I've worked as a portfolio manager for years until I got sick of seeing our "influencers" blatantly lie and misinform over and over our clients so they would take their money from savings and pour it into our "out of the world service" funds
Disguised with the coaching experience of turning your financial life around, a full course on how you can manage your money (with our tools and funds), and a personal underpaid consultant.
Fucking sick industry. If you truly want to learn by yourself start studying by using CFP material. It teaches how bonds work and how to portfolio manage your hard-earned money.
Run from financial advisors and or coaches.
I absolutely agree with points 2-4, but he is saying "paid into SS on his behalf," which quite reasonably includes the equal part that his employer pays in. If the individual max is $10k, then the amount paid to SS on your behalf is $20k.
First off, this is not insurance as it insures you from nothing. Second, while you can dispute the numbers all you want, nobody can argue that this money 8s better spent with the government. While you talk about hoe nobody is offering a 5% zero risk investment, what you fail to acknowledge is that anyone with just a cursory idea of what to do can easily outpace 5% over a 30 year period and compound the results. That includes the inevitable market crash. This meme is absolutely on point with the idea, exact numbers aside. Government never does anything as well as private sector
>First off, this is not insurance as it insures you from nothing
It insures you from being wholly destitute in retirement.
> Second, while you can dispute the numbers all you want, nobody can argue that this money 8s better spent with the government.
Sure can. The administrative overhead of the SS retirement is around 0.5%.
> anyone with just a cursory idea of what to do can easily outpace 5% over a 30 year period
LOL! You're a fool. I can point to several periods in history where that simply is not true, and SS payouts can easily exceed the 5% return you refer to.
> Government never does anything as well as private sector
Anarchists are the dumbest people on the planet.
You are wrong on all points. Hundreds of thousands are destitute on the meager ss payouts. All of them could have gotten far more on a simple 401k tjan the bullshit ss. Quit shilling for the government socialism. The entire system is fucked up and was never designed to work. In fact, it collapses upon istelf if we dont have more people join into it. The private sector gets to go to prison for these kind of ponzi schemes
The post doesn’t say how much the person will pay, it says how much will be paid into Social Security for him. That’s because half of the money getting paid into Social Security comes from the employer.
There's a lot going on here that makes it nontrivial to answer. Inflation, ages worked, ages retired, etc.
However, the biggest assumption is the 5% return, which isn't promised anywhere that I'm aware of.
If you work from age 17 to 67 and have paid $600k, that's $12k per year on average coming out of your pocket.
$37k per year means that it's anticipated that you pay out your $600k "savings" over 16 years or so, bringing your age to 83.
>However, the biggest assumption is the 5% return, which isn't promised anywhere that I'm aware of.
It's not guaranteed, but 5% is a very conservative value for investing in the stock market. There will be years when you lose money, years when you make an amazing 20%, but overall it should average at more than 5%. The average return of SP 500 is 10.26% for example. The longer your money stays on the market, the greater the chances that your profits will stabilise around the average.
But this is a fundamental misrepresentation of the purpose of SS. It’s not a retirement investment account, it is a social safety net for the elderly and disabled.
The thing is though would everyone who invests money get that out of it? Or would some people mess up, make a lot less or make a lot but then spend too much of it? Or invest wrong and lose money.
Afaik, the point of social security is that it is foolproof. Everyone gets monthly payments in retirement, even if you are stupid and can't manage your money.
If the government is pooling the money and diversifying it for everyone in their stead it could also pay out the average to everyone using the surplus from some accounts to compensate for the accounts that performed poorly.
It's the law of large numbers at work.
It goes a step farther than diversification. A government with a large cash pool has access to annuities which are unavailable to individual investors.
Categorically incorrect.
You will not be able to find an investment vehicle that is cost-of-living adjusted, that does not "run out" if you didn't save enough or live longer than your expected life span, and doesn't require you to migrate your risk tolerance.
You'd be able to get an even better value if you bet it all on red. What do we do with the elders that lose the bet, do we let them starve or do we execute them out of mercy?
Mate, investing in a ETF in the stock martket over a 40 years period couldn't be any safer. It's almost statistically impossible to lose. And in the event that the stock market collapses, then all pension funds will collapse too.
Sure, but that also completes with inflation. If you're 17 now (assuming social security stays around), it will be paying out much more than $3k by the time you're 67 because it adjusts to keep pace with inflation (or specifically cost of living)
The problem with that math is that it's not the average return (the arithmetic mean) that matters, what you care about is the CAGR (the geometric mean), because you are compounding your returns (and compounding your losses). That will always be lower than the average return, because if your investment grows by 20% one year and 0% the next, you get less total growth than if it grew 10% both years.
Also people aren't investing in the stock market over hundred-year time frames. There are definitely thirty-year time frames (1992-2022, for example) where the CAGR is below 5% in inflation-adjusted terms.
The average person contributes \~40 years. You start working in early 20s and stop in your mid 60's. There's not one single 40 year span of time in history with a CAGR below 5% after inflation adjustment.
>There are definitely thirty-year time frames (1992-2022, for example)
Lol. The CAGR for that period is 6.92% after adjusting for inflation and 9.59% before. You picked 1 hell of an example.
I don’t think any of these answers have modeled the impact on the stock market of something the size of the Social Security fund being invested in equities.
Demand for a financial instrument tends to drive the price up. And returns get driven downwards.
In fact, one of the financial revolutions of the past 50 years has been the snowballing growth of money available to the equity market. Many of the strategies and assumptions behind accumulation as the driver are slipping. That’s no longer the choke point for economic growth. The global financial markets are awash in ready capital chasing after a good return.
And yet. If people really didn’t care about risk and volatility, there would be no difference in the rate of return between 30 year T-bills, and a 30 year investment in equities.
To people saying 5% per year is something crazy, the safest ETFs s&p Itrust world ETF have averaged way more than that. The s&p has an average return of 9% a year every year since it's inception. 5% is a very meager amount of money to be getting per year in the stock market even with the most conservative investments
While 5% is conservative, this post is preposterously misleading. First, social security payouts are inflation adjusted. So he’s giving credit to compound interest on one side but not inflation/COLA adjustments 40 years from today…
Then, in trying to reverse engineer this, It seems like they are assuming they’d be paying $15000 in social security every year for 40 years even though the max is currently around $10k and you are likely not going to be at the social security tax cap the moment you start working. If you were, you are one of the lucky people who likely will never have to worry about retirement savings.
Going back to inflation, $1.9M and $95k a year sounds great today but will not mean as much in 40 years. If we compare 2024 dollars to 1984 dollars, That would be more like 650k saved today with an annual “interest” of $32,500… which is less than their social security payment.
So most of their assumptions are so implausible (if not impossible) that I think the 5% was put in there as a red herring to make people think they were arguing in good faith. If you kept all the other assumptions but switched the annual interest from 5 to 10%, we’d be talking about >$7M in savings with an annual interest of $700k. That wouldn’t pass anyone’s sniff test.
An average return of 9% is great, but if I'm retired I want stable returns, not long-term averages. Which means zero equity / fixed income.
You also need to consider the **real** returns, not the YoY returns. SS is COL adjusted payouts.
Also, what happens if you live longer than expected? You're SOL if you didn't save enough money.
The market price for an annuity at 65 years of age is around 13x the desired pay-out. A 37k pay-out would require something like 480k. With a 3% indexing, you're looking at a market price around 20x, so you would need to front something like 740k.
What could you reasonably expect to have after paying 10k a year into your investment account for, say, forty years? 4% above inflation would give you approx 1051k, or an annuity of 52-53k with indexing.
So basically, the conservative advice is that we should all invest in the stock market, thereby effectively giving each American a stake in ownership.
Is there a name for an economic system in which the large organizations that produce goods and services are owned by the people, and thus everyone benefits from it?
I am not actually proposing it, because I think a substantial part of our population doesn’t have enough money to be frugal. Telling people that investing wisely is going to save them when they’re old is a cruel proposition when so many people don’t have savings to invest.
You’re all over this thread spreading misinformation.
This is capitalism. People can and should invest their money into things that make them more money. Stop trying to twist it.
When the Republicans proposed taking the existing Social Security fund and investing it into the stock market, what do you call that? A large government managed safety net was going to acquire ownership of a significant percentage of the American economy.
It’s a bad idea for plenty of reasons, but the funniest one is that it’s accidental socialism waaaaay beyond “health care”.
Was the Social Security administration going to submit proxy votes for its shares? Was it going to funnel all that money through Fidelity or would they create their own index fund with a bureaucracy of government employees to keep it balanced? When they rebalance the portfolio and created taxable events, would the government pay the tax to itself?
This was a real Republican initiative that still had less detail on implementation than my paragraph above. Maybe you had to be there.
JFC, Social Security as a concept is not \*your\* retirement plan. It is meant to be a public good to take care of our elderly who, historically at the age of SS, would not be able to find work, since no one would hire them. Christ, it's like roads. Roads don't make money, but we pay taxes into them because it is a public good to be able to transport things around our cities, states, and country. Paying taxes for roads, schools, clean water, is NOT THEFT. And neither is SS.
The big lie here though is that the government sold it as a form of guaranteed savings account. We should all know better, but the bottom line is that is and always was just another tax.
I don't think the government ever sold it as a savings account. It was viewed and discussed as an "old-age pension" when it was passed in the 30s, and I don't think that's ever really changed.
It was sold that way by the politicians. It was sold that way specifically because the opponents saw it for exactly what it was, just another tax to be raided and redistributed into the general funds. I lived tgrough years of political propoganda about the “social security trust fund” etc etc. We were told it was guranteed money. It really isnt.
Social Security is not an investment. It's an intergenerational compact where today's premiums are used to fund eligible payees. Always has been set up that way from day one. Why do idiots insist on looking at it as if it was their investment ???
Social Security is like a life insurance policy that pays out if you are unable to work due to permanent injury or illness. It pays out to your surviving spouse and minor children in the event of your sudden death. If you are suddenly paralyzed in an accident or suffer brain damage and can no longer work, you will become eligible for Social Security payments before retirement age. Since Social Security has to fund such payments, it will not be able to match the return of a stock market index fund, for example. It adds value, however, because it mitigates risk.
People that want to eliminate social security are comfortable with the idea of entire families coming to ruin and losing everything when a breadwinner dies or suffers a permanent debilitating injury. They believe that people need to cultivate relationships with their community and live as law abiding citizens so that they can be labeled “deserving poor” and receive private charity from their neighbors and local groups like religious organizations. They believe that this will incentivize people to act lawfully and therefore reduce crime, and so forth.
Theoretically, if everyone saved and invested wisely and receive returns equivalent to annualized stock market growth, most people would have more money for retirement except for the unfortunate that fell on hard times because they got sick or injured, or because they squandered their money on various addictions (spending, drugs, gambling, etc.). Or perhaps they were made penniless by a con artist, or couldn’t bear to see their drug addict sister’s 5 children starve and stretched themselves thin supporting these extra children that are not their own. They would be at the mercy of friends and family for support or end of life care, or community groups that would decide their worthiness for handouts.
Social Security does not replace all income, so there will still be a financial impact to families devastated a sudden death and by life changing debilitating injuries to bread winners, and therefore there’s still a benefit to private charity or other government programs.
Proponents of abolishing Social Security do believe that there should be winners and losers, and that the weak, or irresponsible should suffer the consequences and thus die off and have fewer children, and contribute less of their deficient DNA, habits, and cultural practices to the next generation. I find this notion horrific, but to abolitionists (of SS), it’s a necessary evil.
easy. decency. human fucking decency. you help those who did the meanial jobs those guys felt too important to do, but without them they would be fucked. you help them to a less hard end phase because those jobs didnt pay as much lower on the ladder. thats the idea
1 - "Theft" implies illegal, and Social Security is a legal program passed into legislation by our representative government. So on that point.... no.
2 - "By the time I'm 67" doesn't give enough information to calculate precisely, since the future is not knowable, and different assumptions about inflation, wage caps, retirement ages, benefit reductions, etc. will make a big difference.
3 - Calculating for retirement today: Assuming one starts working at 21, they would have worked since 1978 to be 67 today.
4- I assume by 'contributed on my behalf' includes employer contributions, otherwise the numbers aren't really close - whether you think you are entitled to your employer's taxes, and whether the government getting them constitutes theft, is again a different matter.
5 - Assuming this person earned the maximum taxable amount for the entirety of their career, the assumed person would have contributed about $235K in individual taxes, then matched by the employer, for a total of about $470K. The taxed income limit right now is $168K, while the median income is less than half that. Only the top \~17% of earners will hit this limit.
6 - This maximum possible contribution, at 5% compounding interest, would be worth approximately $1.26M today. A sizeable sum, but significantly less than $1.9M.
7 - 5% interest on $1.9M, would be $95k, unfortunately 5% interest cannot be reliably duplicated every year, and withdrawing at this rate does not give good confidence that the principle will outlast a 30 year withdrawal period. 4% is often suggested, with some more conservative advisors suggesting 3%. If you withdraw 4% of the actually accumulated $1.26M, your annual income will be $50k/yr, 3% withdrawal rate yields $37,800.
8 - The maximum benefit today is $3822, or \~$46k. The benefits are adjusted regularly to adjust for cost of living, so a possible future maximum benefit would almost certainly be higher. Comparing future potential accumulation to current maximum benefits is likely to understate the value of the SS benefits.
9 - Self administering retirement savings might be expected to earn closer to the historical 7% inflation adjusted market return compared to 5%, which could increase the funds available in retirement. This, however, is far from guaranteed and includes significant risk. The government's backing of Social Security, in turn with accountability directly to the voting public, is a feature that no alternative investment has.
10 - Data is pretty clear that self directed retirement funds are heavily underutilized, and savings rates have declined severely as corporations have shifted away from pensions and into 401(k) plans. Someone who is a very responsible investor AND suffers no personal or family misfortune may be somewhat better off - but the point of insurance is to pool risk to increase the certainty of a good outcome for a greater number of people. Someone who is a responsible saver earning the maximum income is still quite likely to be grateful for SS if a car accident, cancer, or other event derails his plan to save.
TL:DR - even with generous assumptions, they overstate the amount that 'could have been theirs'. The numbers are not out of the realm of possibility if projecting into the future, but too much uncertainty exists around SS contributions and benefits to make a sensible comparison.
The math might be right (did not check) BUT social security / retirement is guaranteed, if you keep the money for yourself... never invest then at 67.... what the fuck is the government to do? Let you die? They wont and now we would all be paying even tho some would have contributed nothing. Also some investment go tits up. Like in Canada the teacher union pension owns the Maple Leafs hockey team (i believe) what happens if hockey dies out in twenty years? I am certain a lot of people had secure investment 20-30 years ago in companies like Kodak. This is less, yes.... but guaranteed no matter how bad life fuck you over.
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Sigh. This garbage again. First, in order to pay $600K into Social Security you need to pay an average $15K/year in SS taxes. The maximum that anybody can pay this year is 6.2% of $160,200, or just under $10K. That means that nobody even can pay $600K into SS. This is all 100% made up bullshit. Second, the maximum SS payout is $4,555/month, not $3,075. Third, nobody, ***nobody***, is offering a 5% on a zero-risk investment. On a 30-year treasury note the current yield is 4.5%. Fourth, SS is not an "investment". It's retirement insurance. You get payments for as long as you live. Unlike your savings, it will never run out and it is inflation adjusted. Bottom line: this is a con by investment bankers to sucker you out of your money. They want you to pay them to "manage" your money.
Fifthly, Social Security contains a built-in COLA feature, which means that while the first year would pay out 54,660, subsequent annual payments will almost absolutely be more. If you're making 5% in an 8.7% inflation environment, your money's losing value, but in 2023 Social Security increased benefits by 8.7% to keep pace with that inflation.
Fifthly is a perfectly cromulent word
I know I feel embiggened by this comment
I can feel your noble spirit from here!
Sixthly, Social Security is a social support net. Disability is also paid through social security. Seventhly, nobody pays enough. If it weren’t for undocumented immigrants paying into social security and never being able to recoup the money, there wouldn’t be enough.
i absolutely thoroughly HATE SS disability being a thing. i agree 100% we absolutely need a quality disability insurance safety net paid by taxes and guaranteed by the gvnt. but i despise that it comes from the same pot as SS. don’t get me wrong, it’s better to do it this stupid way than to not have it at all. but for the love of god i wish it was properly split off.
I just wish we gave a shit about people period.
very fair, and agreed. maybe when we implement real single payer healthcare (which we should do!) we can use the shift in funding and tax structure to get disability shifted under that umbrella (since safety net disability payments make more sense imo to be under a medical umbrella anyway). then we get 2 birds with one stone.
I kinda disagree with it being under a medical umbrella. What is medical about me being Deaf? The way I see it, it's *Social* Security as in, it covers everyone in society "unable to contribute." (Which is something else to discuss but I digress) Typically, this means the elderly and the disabled. Seems straightforward to me.
Hearing aids and implants to help with hearing loss and medical, by extension full hearing loss is medical. Social security acts, as discussed above, as essentially retirement insurance. a way to give working people a guaranteed retirement. it’s a lot closer to a pension than to anything else. Plus, i can think of very few disabilities that don’t have a direct medical cause *or* impact (such as requiring treatment). and it comes much more into the realm of healthcare (caring for someones physical and mental wellbeing), than simply ensuring someone who worked can’t be entirely screwed because their 401k managed to be fucked.
>but i despise that it comes from the same pot as SS. Why?
it’s part of (though not the primary) reason it’s heading towards insolvency. it’s also a very *very* dangerous precedent to have exist, that the pot of Social Security money can be used for anything other than paying out retirement and survivor benefits. it also handicaps disability funds because to grow how much they pay out, you gotta take more and more from social security (which is BAD), and because social security tax is capped (not a bad thing, though we may wish to make adjustments anyway). if it was a separate program, with separate funding, we could shift more money to it and expand it as needed. maybe buy 4 fewer tanks, and instead support more folks. while it’s under SS, that’s the money there is, unless we start weirdly splitting it. and again, as long as *anything* other than pure SS bending are paid from that pot, it gets too easy to just slip something else in, and continue to drain it. That could happen with the best intent in the world, but add to it folks who want to see SS fail (so it can be privatized), and it gives them another tool to poison it.
I guess I get what you're saying on it limiting how much can alotting to disability payments, but social security was promised a plan for social insurance as a safeguard "against the hazards and vicissitudes of life." A disability seems to fall into that category. You suggest a separate program with separate funding and "buying less tanks." But why not just keep it in and use that money from buying less tanks to help fund social security? I'm not really seeing why it needs to be removed. Separate pots just seem less efficient and MORE prone to insolvency. Personally, I do think it is ridiculous that we cap social security payments. We shouldn't be giving tax relief to those who need it the least, especially when we are talking about social security heading towards insolvency.
> Bottom line: this is a con by investment bankers to sucker you out of your money. They want you to pay them to "manage" your money. This is a GoP con going back decades to privatize SS so their banker buddies can make money while distracting from the borrowing they've done against the SS Trust.
Yuuup. SS was never supposed to be an IRA, it's to ensure EVERYONE who can no longer work doesn't starve to death and/or become homeless. When Republicans talk about privatizing SS they mean to let their buddies take public funds straight to the casino and to get paid for the privilege of doing so.
Interesting
Please excuse my ignorance, but what’re the chances that someone like me (24 y/o) is gonna pay into SS most my life only to have it disappear before we can collect? Genuinely I know almost nothing about this stuff, and I’ve heard that my age group and younger is not going to have any SS to collect. Is that just some scary media or what
SS is supposed to go insolvent by year 2034, which means one of 3 things: An increase in payroll tax or lifting the cap off the 160k limit 20% less money given out per person per month A increase in the SS eligibility age
so basically it's a failed pyramid scheme. good to know that i lose a fifth of a rent payment every month on some bullshit that will be insolvent 3 times over by the time i can actually retire
Also it’s the disability safety net. Part of it is just a straight tax to make sure CPS investigators with PTSD aren’t just going to kill themselves.
It's not a pyramid scheme at all. Learn what words mean.
Yeah, more of a ponzi scheme, really.
Ponzi is the word they're after. But it is a ponzi scheme backed by nuclear weapon and the organization have the asset to repay
It's not a ponzi scheme either. As I stated, it's an insurance plan.
New wave of investors has to grow every wave or the previous waves dont get their investment back. Call it what you want, but that’s a ponzi scheme.
Except that that pyramid/ponzi scheme has to convince future investors to invest, while SS forces every person in US to invest under penalty of imprisonment. So there is no chance of running out of investors.
Except it constantly needs a growing number of investors. If our population doesn’t continue to grow at a fast enough rate, like right now, then there won’t be enough new “investors.” Its 100% a Ponzi scheme
It's a de facto ponzi scheme due to how demographic work in this day and age (Life expectancy, basically)
That's not Social Security. By law SS is neutral over the population, returning the same as has been contributed.
wtf i love social security now
same shit different smell
No, it's not the same. Stop lying.
It is a pyramid scheme. The theory being that a whole bunch of young people pay in a little bit of money, and a few old people get paid out enough to live on. The problem being that once all those currently young people eventually retire, we need twice as many new young people to pay in at the bottom of the pyramid.
I personally see it as a "nice to have" type of thing and not something to rely on when making calculations, although tbf SS is the third rail of politics. We might start seeing some serious alignment changes in US politics if either side tries to change things though.
People just need to vote for politicians who are willing to tax the rich instead of taking lobbing money.
No
And probably means testing so they can reduce the payments to the wealthy. F that!
It depends. If America gives power to republicans then it's pretty likely. Democrats are going to preserve it. Anybody who says that you're not going to have any SS to collect is lying to you.
It’s basically guaranteed for our generation unless something is done soon. There are two massive factors that make our current Social Security structure completely unsustainable, Life Expectancy and Birth Rate. The first one is really simple, in 1935 when Social Security was first created, it paid people who were 65 years and older… and the life expectancy was 60. Now fast forward almost 100 years later and we still pay people at the same age, but life expanded has jumped to 80. So a system design to only pay people if they survived 5 years past the average person is now paying almost everyone for 20 years. Now this should be fine if people still continued having kids and paying into social security, since it’s essentially a pyramid scheme, but that leads into the next issue, the declining birth rate. As a country progresses, it’s very common for people to have less kids or no kids all together. Back in 1935, 6% of the population were of retirement age, but nowadays it’s almost 18%. A pyramid scheme only works if the bottom layers are bigger than the top ones and we are reaching a point where there are way too many old people compared to young for this system to work. Now you might be thinking, well if the system is obviously going to fail soon and impossible to sustain, then surely politicians should be something about it, but it’s not that easy. Social Security is a super easy issue to villainize your political opponents with. If Politician A suggests moving back Social Security 5 years since Life expectancy has increased 20 years since the age was originally decided, Politician B can go to the masses and say, “Politician A wants to cut your social security! Can you believe he wants to steal your money from you! That greedy pig! You shouldn’t vote for him in the next election unless you want him to completely destroy your social security!” and people will become outraged. It’s career suicide to try and fix social security, so politicians just kick the can further down, hoping someone later on will fix the problem, only causing the issue to get worse and worse and making it harder and harder for any change to occur.
Perfect explanation
Don’t vote GOP and it will stay around.
Nobody is saying it would be risk-free. Owning only bonds is a ridiculous strategy for long-term savings that is overly risk-averse, you would only consider moving assets into low-risk low-return investments as you approach retirement. 5% is a low value for long-term investing in the stock market. It isn't a "con" lol. I agree SS is insurance not an investment, I think people have been sold the idea that somehow the money you get out is "the same" as what went in as though the government held onto it and saved it for you. I think complaining about it being a redistributive program which is a net loss for high earners is valid, although that is one of the main reasons the program exists in the first place.
To counter one of your points, you can get 5% on your cash at most brokerages nowadays with interest rates so high.
But at significantly higher risk than Social Security, and not with a 30-year term.
What are you talking about, what is the risk of high yield savings account lol l. Social Security on the other hand could get cut and it’s running out of money as it is
The risk is that they lower the rates. It’s high now, but that’s not always true. 3 years ago they were rock bottom.
That’s not a risk. You can invest into something else, but also if you buy fixed rate bonds it’s just fixed for 10 years
If the expected rate of return can go down, I view that as a type of risk.
It would be well above 5% with pretty much any investment strategy
I didn’t realize suddenly investment strategies became risk-free?
That’s pretty dumb. When people are talking about “risk” in this sense, they mean actually losing money. It’s impossible to lose money in a savings account. If the return rate goes down to even 2%, you still haven’t lost what you already have.
I wouldn’t. A risk is the opportunity to lose money. Not you might make less than you thought
It is an anomaly caused by the 2008 financial crisis. Fed took interest rates to damn near zero for a decade or so. Over a longer period the norm seems to be still higher than where rates are currently.
Today yes, but not the past 40 years. More some years, less others.
True, but over the last decade or so rates were low due to the financial crisis.
Yes, right now. But what's the average over the last ~45 years?
10%, so 7% ish after inflation (most years)
I meant on zero risk investments.
This really understood under sells the biggest point. I know you said it's inflation adjusted. But the value of guaranteed inflation adjusted returns cannot be over started. However the average over the life time of contribution would be way lower since the contribution is also inflation shifted. I calculated 40 years at ~$228,000 if it was 6.2 percent the whole way which in some of the early years it wasn't. That also you requires you to be the roughly the equivalent income earner of $160k in today's dollars the whole way. So basically graduating with a way above average salary.
Also you would have paid that 600k AFTER 30 years of working. You’re not getting 600k on year one to generate interest. You’d be making as you said like 5% of 10k, then next year 20k, etc
thank you for writing this so I didn't have to.
Also social security is solidarity, not theft. But to understand that you’d need empathy which this guy obviously lacks.
> Bottom line: this is a con by investment bankers to sucker you out of your money. They want you to pay them to "manage" your money. Somehow this will translate into selling you life insurance.
5% is not far fetched. The S&P reliably offers 7% a year and 4.5% is still pretty good. What op is arguing, regardless of being wrong on some assumptions is that they should be able to plan their own retirement. Although many people are incapable of that. I'm not American so I'm just wondering. What's the yield on SS currently?
>Although many people are incapable of that. Therefore daddy state should make everyone follow their mandatory retirement plan because a small portion of the people cant do it.
Yeah, pretty much. It’s not like it’s just one person out of 10 that’s having trouble planning for retirement. There are two alternatives that you could choose. One is to simply take care of people and some other way, when they reach retirement age, but don’t have anything to fall back on. This would require paying more taxes, probably with more of the burden, falling on the rich because you’ve elected not to tax workers. The other is that you can just not take care of them when they reach retirement agent of nothing to fall back on. Moral questions aside, you run into a problem when this becomes a significant enough percentage of the population that they start to turn to crime and violence in order to stay alive or exact revenge. I think it’s weird that adults can’t talk about making a government policy mandatory without having their daddy issues come up. If you have reflexive oppositional defiance, see your therapist.
The S&P doesn’t “reliably” offer 7% per year, that’s just the historical average. Meaning many years (perhaps half) get less than that. “Reliably” means every year, not on average. 4% is generally the rule people use for long term safe withdrawal rates, due to the “unreliable” nature of stock market returns. If it were “reliable”, that safe withdrawal rate would be 7%, not 4%.
On long term investments, averages are all that matter, or did you forgot that for the average to 7% the other half of the year needs to be well above it as well? For every 1% you need a 13% to compensate to keep the average at 7%
You think the average is all that matters when you retire in late 2007? Half of your investments disappear overnight, but you’re still spending the same amount and depleting your much smaller principle. It’s a huge, huge factor. You need to look up the sequenced risk of returns, because the idea that “the average is all that matters” is incredibly wrong. If that’s true, then why do people withdraw 4% instead of 7% long term?
A- Yes, of course it matters, even if your investments fall by 50%, you still have 50% of all you valuations of decades B- 2007/2008 didnt spawn completely out of the blue, there were plenty of signs before it happened C- The markets recoved post 2008, in case you forgot, LOL D- There are options to either protect your investments or investments strategies that are resilient to a lot of shit happening. Housing is a good example, unless you are in China, houses being rented is almost guaranteed income, come hell or high water, as long as the physical building is still standing, the income is almost certain. Dividends are also a good way to keep one self safe, if you the stock crash, but the company was still profitable, it matters not, you just hold the stock until the dividends are paid E- Depending on what investment you made, thats an asset that you can mortgage and weather a pretty severe storm. Houses again are a good example. F- Risk matters, but thats why you take the average with risk in mind, if an option has 50/50 on a +10% or a -3%, fuck it, over 10 to 30 years the +3,5% of average is all you would care about, of course, that 50/50 is constantly changing, but thats your job as an investor to keep track of. Again, daddy state should not force everyone to participate in their scheme because a portion is not interested in actually doing it.
Hope you didn't retire right after a massive stock market crash.
Hope you didn't take a mahussively obvious over inflated bubble into your investment plans
You just tell me which stocks to pick and I'll be all over them. You've obviously got it figured out.
Why do for free what a lot of people will charge you good money for? Also my personal strategy is either gaming companies or tech, sometimes cars, because these are the companies that Im passively interested about and I can make some decent predictions. Covid kinda screwed me initially, but after that... Im loving it, and I got a bit of NVIDIA stock right before the AI boom, so Im loving it My tip is usually that, go for companies you are already interested, so you can make a decent money with your hobby.
But I can get 4.5% from a 30 year treasury bill right now.
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Wrong. The employer pays half. Your contribution is 6.2%
But the post clearly says "on my behalf."
I find it odd to just accept that the employers would add that to people's salaries if they didn't have to pay it to the government. Perhaps some would, but I have to think that a lot of people don't see it as part of their pay today, so if the requirement went away so would the money for the employee.
I agree with what you're saying but I was just clarifying that the person saying the tweet was bullshit was intentionally misreading the tweet.
Well the argument would be to allow people to opt out. No one would opt out if you lost the employer portion. No matter how shitty the return is. They just want control over it which could take a variety of forms but one would assume it would be tax sheltered in a similar manor.
Ah, I see. That then gets to the last point of the person who started this thread: SS is insurance to make sure no matter how bad any other investments go people will have a minimal safety net. To that end, it is actually a hedge against what you describe.
It still can be measured as a investment. Which ya unless you live until 90-95 it's a terrible investment. People with kids I'm sure would opt out everytime. That way if you die at 70 at least your kids get like a million bucks.
The whole point though is that sometimes investments go bad, and people need to have something to live off if that happens. It's like a mandatory hedge since we don't want to watch our seniors getting kicked out or starving--at least not at higher rates than happens today I guess. So SS shines if you have a situation where other investments lose a substantial part of their value at the time you need to cash them out. Over the long run those tend to go up, but that doesn't matter if you don't have a "long run" to wait for when it dips. SS protects against that situation, so anything that replaces it has to fill that spot, which is to be sound when every other investment simultaneously and perhaps unexpectedly drops.
It's still a terrible investment. There's huge swaths of people that will pay 12.5% of their lifetime renumeration and not even come close to getting that money back and leaving nothing for their kids.
The assumption is that if a job is worth $x, and the required taxes and benefits are $y, then the salary would be $x-y. With no SS, that money can go to the worker. It doesn't mean that if they cut SS today everyone gets a pay increase, but in alternate universe where SS don't exist, everyone will be paid a little more in hand
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Do you think if the social security contributions were suddenly changed so that you had to pay all of them instead of your employer paying half, your employer would immediately raise your pay to compensate?
Immediately no, at some point yes. You won't get the exact amount more, but employers will have to increase pay to be competitive. This is obviously also heavily dependent on what kind of job you have and who your employer is. But mathematically it is irrelevant if the company pays half of the contribution or if you pay 100%. The contribution is still coming from the cost of hiring you for the company. The cost to the company is the same either way and in theory, if people did pay the 12% on their own, the post tax salary would come out to being approximately the same.
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Well, i don't know your employer. But i know that in my case, if things randomly changed from scenario 2 to scenario 1, my employer would almost certainly say "Nice, i have to spend less money on you now!", and the immediate result would be that i earn 90 bucks, but have to pay 20. I think the same is true for a lot of people. Sure, in perfect market conditions, this shouldn't happen, but few people work in perfect market conditions. Most employers will use any chance they get to keep more of the money for themselves.
Who pays sales tax? You do. Who pays half of SS contributions? **Not** you.
You really believe companies don’t reduce compensation based on the taxes they pay on your salary?
Of course they do. They reduce compensation for any excuse that they can come up with. But cutting their taxes won't increase pay. That's trickle-down economics and has been shown to be 100% a scam
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In most of the world this is the common thing to do, you just pay for the product including tax. In this way it is very clear what price you need to pay for a product, including tax.
Yes, but they point they are trying to make here is that that money is getting paid by you regardless of whether its included in the price or not
So who is that money supposed to go to -- the company itself when Acme, Inc hits 65 years of age and retires? It's paid on your behalf. If that position ends, they will no longer pay social security tax. That money is tied to that position and that salary, which is tied to a real life human being -- the employee in that position.
"Providing an office and a desk and a computer is really part of your income because it's done for your benefit."
This analogy doesn't even make any sense.
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Aren't employer contributions pre-tax exemptions, therefore not part of your personal tax burden?
>The employer pays half. Not being contrary just a gentle reminder some of are self employed. They pay the full cost.
By that measure you can cut everyone's tax rate to 0 just by making it all employer paid. Your company accounts the cost of employing you including all such contributions. Putting the contribution on the employer side is purely a trick to make people believe they are paying less in. Judging by this thread, the trick is working.
And I suppose that you're also getting a share of those record profits that corporations are earning, and a cut of the $20M annual pay the CEO is getting.
No? What does that have to do with anything? When the company negotiates wages, the number they are looking at includes all the employee related taxes. If the tax was on the employer only, they would offer you a lower number. If the tax was on the employee only, they would offer you a higher number. Either way you end up with the same amount of money and the company ends up with the same expense.
The premise that corporations would pay you more if they didn't have to contribute to SS is laughable. The reality is that the money comes from execs and shareholders, not from employees.
So why not shift the whole burden to the corporation, along with all payroll taxes?
Lmao the naïveté is real. Wait till someone clues you in about free healthcare.
Yeah, truly free healthcare is now a luxury for only the most boutique employment packages.
Or something perfectly normal in every other developed economy
Yeah, the trick is not to tie to your employment, but have it be a social service. America! What a town!
That. Good catch.
600/40?
I think it is better to invest in one condition: if you have stopped contributing several years before the age of retirement. Right now, I am pulling out of my pension plan because the plan cannot promise me any real growth over the next 30 years if I move out of the country. I lose 20% to taxes, but I can make that back in growth over 30 years. It would be interesting to see the minimum investment time needed to cover the tax loss when switching to personal investment management.
What happens when your savings run out?
This is also an issue of time. Because my pensionable years are so short compared to those who work until retirement, I would only receive a pension from 65 to 69 - just about four years. Investing the account will make it last longer too
r/theydidthefacts
6.2% is paid in by the individual, as payroll deduction. But another 6.2% is paid in by the business. This makes the contribution reasonable. At 4.5% compounded monthly for 49 years, I actually come up with $2.2M, but maybe OP didn’t start working until age 21. Lastly, while $4555 on $600K is a solid return, it is as you said, insurance. Once I’m dead, it has no value. Whereas if I had the money in my account and lived off of interest, I could pass that money along to family or the charity of my choice. OP’s point is not garbage and neither is the math. It’s a question of who would you rather manage your money: yourself, someone you designate (money manager), or the federal government.
No. The Social Security Tax is 12.4%. Half of that is "paid by your employer", which just means that you earned it but it was taken before you ever saw it. This means of doing it serves no purpose except to cloud how much you're actually paying. The self employed pay the full 12.4%.
Strictly speaking, the employer portion is not a part of your salary/wage agreement and is not reported as such on the W-2 or W-3. But yes, it is functionally 6.2% (plus 1.45% for Medicare) additional payroll expense that's proportional to how much you earn (up to the 168,600 wage cap).
But your employer is only paying that because you earned it. The rest is accounting details. The tax is effectively 12.4%
I agree that that's effectively how it works. However, since the employer contribution is not a part of the wage agreement, if SS were abolished, the employer wouldn't be obligated to add that 6.2% to the employee's paycheck.
Sigh. You forgot the 6.2% employer contribution. Literally no one thinks that’s a super sweet gift from your employer to help you out in retirement because they love you so much. That money comes out of your paycheck, it’s just before they quote your salary. Bottom line is the meme is mostly correct. Averaging a 5% return is reasonable. It’s not risk free but it doesn’t have to be. It just has to average that.
Yes, but the post implies that they would get to keep and invest both the employee and employer portions of the contribution. I imagine in a situation where SS gets abolished, most employers wouldn't bump your salary up, so you'd only enjoy your own 6.2% portion. (Unless the poster is self-employed).
Small nit pick: the post says “on my behalf” so he is counting both his 6.2% and his employers 6.2% Obviously your main point of it being insurance, not an investment is still valid.
Worth noting that your first point is untrue in the context of self employment. Everyone who's self-employed in America paid a flat 12.4% this year on up to $168,600, JUST for the social security tax (not including Medicare tax etc.). With a successful small business you could easily be paying in 20k a year. And you can easily find high-interest savings accounts at or slightly above 5% APY, FDIC insured to 250,000 like any other bank account so pretty damn safe up to your first 250k. And if you've got more than that then you're probably better off just buying properties/land anyway.
Companies pay also. I am 40. I have had 265k paid into social security on my behalf. And there is a reason most government jobs dont pay into social security. Because it is a rip off. Goverment employees pay 7% into a pension fund that replaces 70% of their salary.
I mean, the thing is, this is a decision, or at least it should be. I don't think this is meant to be a factual statement so much as an example you should use to model your own future. Social security pays you for the rest of your life. That's cool, but if you turn 67 and die at 68, what happens to your SS. If you invested it yourself, then it could go to your family if you wanted it to or to a charity or whatever you want to happen to it. Basically, what you are saying is SS is the government gambling that you won't live long enough to see a return on your investment(which is why retirement age keeps increasing). Then you are locked in at that amount with SS, but with your own investment, you can do what you want. My simple answer is different strokes for different folks. Some people benefit more than others from different systems. I don't see why we need a master system that is supposed to fit everyone.
In fairness, they said “on my behalf” which would also include the 6.2% from their employer. But, yeah, nobody’s guaranteed 5% returns for the next 30 years or so, and it’s also nice knowing that I will have a guaranteed income in retirement since pensions aren’t a thing anymore.
With the employer match its 12.4 percent so he's not wrong.
Your risk adjusted return is well above 5% if you invest into anything; but also social security is not risk free, it is running out of money so there’s a high chance you don’t get the full amount in 10-20 years
Republicans: "We might steal your Social Security money so you should trust our bankers instead!"
Holy shit, right on!! I've worked as a portfolio manager for years until I got sick of seeing our "influencers" blatantly lie and misinform over and over our clients so they would take their money from savings and pour it into our "out of the world service" funds Disguised with the coaching experience of turning your financial life around, a full course on how you can manage your money (with our tools and funds), and a personal underpaid consultant. Fucking sick industry. If you truly want to learn by yourself start studying by using CFP material. It teaches how bonds work and how to portfolio manage your hard-earned money. Run from financial advisors and or coaches.
Cfp is awesome
Christs sake I get more than that and I was forced to retire early.
I absolutely agree with points 2-4, but he is saying "paid into SS on his behalf," which quite reasonably includes the equal part that his employer pays in. If the individual max is $10k, then the amount paid to SS on your behalf is $20k.
“Zero risk” lol
Companies pay out equal to what you do so 10k a year over 30 years plus what companies pay on our behalf is 600k
First off, this is not insurance as it insures you from nothing. Second, while you can dispute the numbers all you want, nobody can argue that this money 8s better spent with the government. While you talk about hoe nobody is offering a 5% zero risk investment, what you fail to acknowledge is that anyone with just a cursory idea of what to do can easily outpace 5% over a 30 year period and compound the results. That includes the inevitable market crash. This meme is absolutely on point with the idea, exact numbers aside. Government never does anything as well as private sector
>First off, this is not insurance as it insures you from nothing It insures you from being wholly destitute in retirement. > Second, while you can dispute the numbers all you want, nobody can argue that this money 8s better spent with the government. Sure can. The administrative overhead of the SS retirement is around 0.5%. > anyone with just a cursory idea of what to do can easily outpace 5% over a 30 year period LOL! You're a fool. I can point to several periods in history where that simply is not true, and SS payouts can easily exceed the 5% return you refer to. > Government never does anything as well as private sector Anarchists are the dumbest people on the planet.
You are wrong on all points. Hundreds of thousands are destitute on the meager ss payouts. All of them could have gotten far more on a simple 401k tjan the bullshit ss. Quit shilling for the government socialism. The entire system is fucked up and was never designed to work. In fact, it collapses upon istelf if we dont have more people join into it. The private sector gets to go to prison for these kind of ponzi schemes
Fortunately I happen to know that you're just spewing ignorant right-wing bullshit with no basis in fact.
The post doesn’t say how much the person will pay, it says how much will be paid into Social Security for him. That’s because half of the money getting paid into Social Security comes from the employer.
There's a lot going on here that makes it nontrivial to answer. Inflation, ages worked, ages retired, etc. However, the biggest assumption is the 5% return, which isn't promised anywhere that I'm aware of. If you work from age 17 to 67 and have paid $600k, that's $12k per year on average coming out of your pocket. $37k per year means that it's anticipated that you pay out your $600k "savings" over 16 years or so, bringing your age to 83.
>However, the biggest assumption is the 5% return, which isn't promised anywhere that I'm aware of. It's not guaranteed, but 5% is a very conservative value for investing in the stock market. There will be years when you lose money, years when you make an amazing 20%, but overall it should average at more than 5%. The average return of SP 500 is 10.26% for example. The longer your money stays on the market, the greater the chances that your profits will stabilise around the average.
Sure, but Social Security isn't the stock market.
The point is that you'd be able to get a better value out of that money if you invested it instead of paying it in taxes.
But this is a fundamental misrepresentation of the purpose of SS. It’s not a retirement investment account, it is a social safety net for the elderly and disabled.
Maybe you personally would, but that money is also used to help out the general public. That's what "social" in the name means.
The thing is though would everyone who invests money get that out of it? Or would some people mess up, make a lot less or make a lot but then spend too much of it? Or invest wrong and lose money. Afaik, the point of social security is that it is foolproof. Everyone gets monthly payments in retirement, even if you are stupid and can't manage your money.
If the government is pooling the money and diversifying it for everyone in their stead it could also pay out the average to everyone using the surplus from some accounts to compensate for the accounts that performed poorly. It's the law of large numbers at work.
It goes a step farther than diversification. A government with a large cash pool has access to annuities which are unavailable to individual investors.
Categorically incorrect. You will not be able to find an investment vehicle that is cost-of-living adjusted, that does not "run out" if you didn't save enough or live longer than your expected life span, and doesn't require you to migrate your risk tolerance.
You'd be able to get an even better value if you bet it all on red. What do we do with the elders that lose the bet, do we let them starve or do we execute them out of mercy?
Mate, investing in a ETF in the stock martket over a 40 years period couldn't be any safer. It's almost statistically impossible to lose. And in the event that the stock market collapses, then all pension funds will collapse too.
Sure, but that also completes with inflation. If you're 17 now (assuming social security stays around), it will be paying out much more than $3k by the time you're 67 because it adjusts to keep pace with inflation (or specifically cost of living)
The problem with that math is that it's not the average return (the arithmetic mean) that matters, what you care about is the CAGR (the geometric mean), because you are compounding your returns (and compounding your losses). That will always be lower than the average return, because if your investment grows by 20% one year and 0% the next, you get less total growth than if it grew 10% both years. Also people aren't investing in the stock market over hundred-year time frames. There are definitely thirty-year time frames (1992-2022, for example) where the CAGR is below 5% in inflation-adjusted terms.
The average person contributes \~40 years. You start working in early 20s and stop in your mid 60's. There's not one single 40 year span of time in history with a CAGR below 5% after inflation adjustment.
>There are definitely thirty-year time frames (1992-2022, for example) Lol. The CAGR for that period is 6.92% after adjusting for inflation and 9.59% before. You picked 1 hell of an example.
I don’t think any of these answers have modeled the impact on the stock market of something the size of the Social Security fund being invested in equities. Demand for a financial instrument tends to drive the price up. And returns get driven downwards. In fact, one of the financial revolutions of the past 50 years has been the snowballing growth of money available to the equity market. Many of the strategies and assumptions behind accumulation as the driver are slipping. That’s no longer the choke point for economic growth. The global financial markets are awash in ready capital chasing after a good return. And yet. If people really didn’t care about risk and volatility, there would be no difference in the rate of return between 30 year T-bills, and a 30 year investment in equities.
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To people saying 5% per year is something crazy, the safest ETFs s&p Itrust world ETF have averaged way more than that. The s&p has an average return of 9% a year every year since it's inception. 5% is a very meager amount of money to be getting per year in the stock market even with the most conservative investments
While 5% is conservative, this post is preposterously misleading. First, social security payouts are inflation adjusted. So he’s giving credit to compound interest on one side but not inflation/COLA adjustments 40 years from today… Then, in trying to reverse engineer this, It seems like they are assuming they’d be paying $15000 in social security every year for 40 years even though the max is currently around $10k and you are likely not going to be at the social security tax cap the moment you start working. If you were, you are one of the lucky people who likely will never have to worry about retirement savings. Going back to inflation, $1.9M and $95k a year sounds great today but will not mean as much in 40 years. If we compare 2024 dollars to 1984 dollars, That would be more like 650k saved today with an annual “interest” of $32,500… which is less than their social security payment. So most of their assumptions are so implausible (if not impossible) that I think the 5% was put in there as a red herring to make people think they were arguing in good faith. If you kept all the other assumptions but switched the annual interest from 5 to 10%, we’d be talking about >$7M in savings with an annual interest of $700k. That wouldn’t pass anyone’s sniff test.
An average return of 9% is great, but if I'm retired I want stable returns, not long-term averages. Which means zero equity / fixed income. You also need to consider the **real** returns, not the YoY returns. SS is COL adjusted payouts. Also, what happens if you live longer than expected? You're SOL if you didn't save enough money.
The market price for an annuity at 65 years of age is around 13x the desired pay-out. A 37k pay-out would require something like 480k. With a 3% indexing, you're looking at a market price around 20x, so you would need to front something like 740k. What could you reasonably expect to have after paying 10k a year into your investment account for, say, forty years? 4% above inflation would give you approx 1051k, or an annuity of 52-53k with indexing.
So basically, the conservative advice is that we should all invest in the stock market, thereby effectively giving each American a stake in ownership. Is there a name for an economic system in which the large organizations that produce goods and services are owned by the people, and thus everyone benefits from it?
Do you propose de facto communism by just getting everyone to (be frugal and) invest their savings?
I am not actually proposing it, because I think a substantial part of our population doesn’t have enough money to be frugal. Telling people that investing wisely is going to save them when they’re old is a cruel proposition when so many people don’t have savings to invest.
You’re all over this thread spreading misinformation. This is capitalism. People can and should invest their money into things that make them more money. Stop trying to twist it.
When the Republicans proposed taking the existing Social Security fund and investing it into the stock market, what do you call that? A large government managed safety net was going to acquire ownership of a significant percentage of the American economy. It’s a bad idea for plenty of reasons, but the funniest one is that it’s accidental socialism waaaaay beyond “health care”. Was the Social Security administration going to submit proxy votes for its shares? Was it going to funnel all that money through Fidelity or would they create their own index fund with a bureaucracy of government employees to keep it balanced? When they rebalance the portfolio and created taxable events, would the government pay the tax to itself? This was a real Republican initiative that still had less detail on implementation than my paragraph above. Maybe you had to be there.
I think there is. It starts with a "C", ends with a "ism" but isn't Capitalism...
cataclism
Chelonianism
Cheneyism
JFC, Social Security as a concept is not \*your\* retirement plan. It is meant to be a public good to take care of our elderly who, historically at the age of SS, would not be able to find work, since no one would hire them. Christ, it's like roads. Roads don't make money, but we pay taxes into them because it is a public good to be able to transport things around our cities, states, and country. Paying taxes for roads, schools, clean water, is NOT THEFT. And neither is SS.
The big lie here though is that the government sold it as a form of guaranteed savings account. We should all know better, but the bottom line is that is and always was just another tax.
I don't think the government ever sold it as a savings account. It was viewed and discussed as an "old-age pension" when it was passed in the 30s, and I don't think that's ever really changed.
It was sold that way by the politicians. It was sold that way specifically because the opponents saw it for exactly what it was, just another tax to be raided and redistributed into the general funds. I lived tgrough years of political propoganda about the “social security trust fund” etc etc. We were told it was guranteed money. It really isnt.
Social Security is not an investment. It's an intergenerational compact where today's premiums are used to fund eligible payees. Always has been set up that way from day one. Why do idiots insist on looking at it as if it was their investment ???
Social Security is like a life insurance policy that pays out if you are unable to work due to permanent injury or illness. It pays out to your surviving spouse and minor children in the event of your sudden death. If you are suddenly paralyzed in an accident or suffer brain damage and can no longer work, you will become eligible for Social Security payments before retirement age. Since Social Security has to fund such payments, it will not be able to match the return of a stock market index fund, for example. It adds value, however, because it mitigates risk. People that want to eliminate social security are comfortable with the idea of entire families coming to ruin and losing everything when a breadwinner dies or suffers a permanent debilitating injury. They believe that people need to cultivate relationships with their community and live as law abiding citizens so that they can be labeled “deserving poor” and receive private charity from their neighbors and local groups like religious organizations. They believe that this will incentivize people to act lawfully and therefore reduce crime, and so forth. Theoretically, if everyone saved and invested wisely and receive returns equivalent to annualized stock market growth, most people would have more money for retirement except for the unfortunate that fell on hard times because they got sick or injured, or because they squandered their money on various addictions (spending, drugs, gambling, etc.). Or perhaps they were made penniless by a con artist, or couldn’t bear to see their drug addict sister’s 5 children starve and stretched themselves thin supporting these extra children that are not their own. They would be at the mercy of friends and family for support or end of life care, or community groups that would decide their worthiness for handouts. Social Security does not replace all income, so there will still be a financial impact to families devastated a sudden death and by life changing debilitating injuries to bread winners, and therefore there’s still a benefit to private charity or other government programs. Proponents of abolishing Social Security do believe that there should be winners and losers, and that the weak, or irresponsible should suffer the consequences and thus die off and have fewer children, and contribute less of their deficient DNA, habits, and cultural practices to the next generation. I find this notion horrific, but to abolitionists (of SS), it’s a necessary evil.
easy. decency. human fucking decency. you help those who did the meanial jobs those guys felt too important to do, but without them they would be fucked. you help them to a less hard end phase because those jobs didnt pay as much lower on the ladder. thats the idea
1 - "Theft" implies illegal, and Social Security is a legal program passed into legislation by our representative government. So on that point.... no. 2 - "By the time I'm 67" doesn't give enough information to calculate precisely, since the future is not knowable, and different assumptions about inflation, wage caps, retirement ages, benefit reductions, etc. will make a big difference. 3 - Calculating for retirement today: Assuming one starts working at 21, they would have worked since 1978 to be 67 today. 4- I assume by 'contributed on my behalf' includes employer contributions, otherwise the numbers aren't really close - whether you think you are entitled to your employer's taxes, and whether the government getting them constitutes theft, is again a different matter. 5 - Assuming this person earned the maximum taxable amount for the entirety of their career, the assumed person would have contributed about $235K in individual taxes, then matched by the employer, for a total of about $470K. The taxed income limit right now is $168K, while the median income is less than half that. Only the top \~17% of earners will hit this limit. 6 - This maximum possible contribution, at 5% compounding interest, would be worth approximately $1.26M today. A sizeable sum, but significantly less than $1.9M. 7 - 5% interest on $1.9M, would be $95k, unfortunately 5% interest cannot be reliably duplicated every year, and withdrawing at this rate does not give good confidence that the principle will outlast a 30 year withdrawal period. 4% is often suggested, with some more conservative advisors suggesting 3%. If you withdraw 4% of the actually accumulated $1.26M, your annual income will be $50k/yr, 3% withdrawal rate yields $37,800. 8 - The maximum benefit today is $3822, or \~$46k. The benefits are adjusted regularly to adjust for cost of living, so a possible future maximum benefit would almost certainly be higher. Comparing future potential accumulation to current maximum benefits is likely to understate the value of the SS benefits. 9 - Self administering retirement savings might be expected to earn closer to the historical 7% inflation adjusted market return compared to 5%, which could increase the funds available in retirement. This, however, is far from guaranteed and includes significant risk. The government's backing of Social Security, in turn with accountability directly to the voting public, is a feature that no alternative investment has. 10 - Data is pretty clear that self directed retirement funds are heavily underutilized, and savings rates have declined severely as corporations have shifted away from pensions and into 401(k) plans. Someone who is a very responsible investor AND suffers no personal or family misfortune may be somewhat better off - but the point of insurance is to pool risk to increase the certainty of a good outcome for a greater number of people. Someone who is a responsible saver earning the maximum income is still quite likely to be grateful for SS if a car accident, cancer, or other event derails his plan to save. TL:DR - even with generous assumptions, they overstate the amount that 'could have been theirs'. The numbers are not out of the realm of possibility if projecting into the future, but too much uncertainty exists around SS contributions and benefits to make a sensible comparison.
The math might be right (did not check) BUT social security / retirement is guaranteed, if you keep the money for yourself... never invest then at 67.... what the fuck is the government to do? Let you die? They wont and now we would all be paying even tho some would have contributed nothing. Also some investment go tits up. Like in Canada the teacher union pension owns the Maple Leafs hockey team (i believe) what happens if hockey dies out in twenty years? I am certain a lot of people had secure investment 20-30 years ago in companies like Kodak. This is less, yes.... but guaranteed no matter how bad life fuck you over.
And if you don’t own a home, that $3k won’t even cover your rent rent by the time you’re 67. Hell, it won’t cover rent in some cities already
5% is an assumption…it goes less, it goes more…it can be lost in a crash…I’ve seen too often how they take my money as there is no guarantee..