Social Security question?

[yep yep yep]

why do some people think that their social security investment return is inadequate?

[Mr. Sonny]

Because they could earn a lot more by investing the money themselves.

[Adam S]

Or lose it all. That's what we need, millions of seniors betting their entire retirement income on the stock market. The market has certainly proven to be reliable in the past, like in 2008.

[Cat Lover]

Some think they can do better on their own. And finance companies that want to handle the money (at total profit but no risk to themselves) are more then happy to pass along that story.

Social Security is not an investment policy. It is an insurance policy, and if you are disabled long before retirement age, but qualify, you get income for life. And after retirement, you get income for life. And the income is set by law, not subject to the vagaries of the Stock market.

One might think the stock market collapse during the last year of the Bush Administration would put to rest the idea that a person can always do better then Social Security. That stock market collapse certainly wiped out trillions collectively from people's 401k accounts.

[brenton s]

If you are interested in economic returns of Social Security, you should look at the money's worth studies from the Social Security Administration. The tell a simply fact that the returns on Social Security are awful.

You do not measure SS returns by what you get versus what you paid because it is insurance - and there is a possibility of getting nothing. You want to look at the expected returns vs the present value of past contributions. By that measure Social Security isn't terribly different from spending a quarter to buy a dime for people entering the system.

Returns vary widely, though. Low-wage workers and married workers still get a decent deal.

If you have a difficult time with the moneys worth studies, feel free to email me here with questions.