We keep hearing that letting you manage your Social Security account yourself would be a “risky scheme.” Markets fluctuate. The value of a stock or bond can go down as well as up. Risky. But the key here is what happens in the long run. And the fact is, in any twenty-year period, real return in the stock market averages more than 10 percent.
You don’t have to be an expert investor, either, because as manager of your own funds you can pick relatively conservative investment plans. And there is every reason to believe that an average investor can acquit himself quite nicely over the 45 years or so of a typical career, and earn a lot more than he’s now being promised under Social Security. Find out for yourself by visiting the socialsecurity.org web site. The site has a calculator that lets you compare your promised Social Security benefits with what you could have earned, if only you’d been allowed to invest your social security taxes in the market instead of in politicians.
If you were born in 1948 and now earn $20,000 a year, you can expect to get $903 a month from Social Security. But if you had been investing the same funds in bonds earning 6 percent, you could expect $1,257 a month. And with stocks earning 10 percent, what your retirement income could have been shoots up to $5,930 a month. Or, to $8,895 a month if you’re now earning $30,000 a year. But don’t take my word for it. Go to the socialsecurity.org web site and plug in your own numbers. Find out what you’re missing.
This is Common Sense. I’m Paul Jacob.