For each year, I used the average yield for the longest-term Treasury bond that was available then (usually, 30 years). I simplified it by assuming that my Social Security contributions were invested in that bond at the end of the calendar year.
Each year, I took all the dividends from the bonds I had bought the previous years, and combined it with my contributions and invested them in a new Treasury bond at the average rate for that year.
In just a bit less than 40 years of working, I would have about $800,000 in the bank right now. That's not theoretical: it's historical, based on what is allegedly being done with excess Social Security contribution: invested in long-term bonds.
If I hold the existing bonds to maturity, and continue to purchase bonds at the existing (albeit low) yields, I'd have $1,600,000 at my full retirement age, and $1,850,000 at age 70 if I wait until then to start withdrawing (I have other assets and income I could draw down before then).
Plug that data into www.immediateannuities.com, and you would have lifetime guaranteed income of $13,042/month. Keep in mind that it would be a fixed amount, with no CPI adjustment.
By comparison, Social Security promises to pay me about $5,000 a month, if I wait until age 70 and inflation averages about 3%/year. There won't be enough money to do so, but that's another issue....
But, let's do a direct comparison: at 3%/year inflation after I turn age 70, I'd have to live to age 112 before my inflation-adjusted Social Security benefits would even match the annuity payment. I'd have to live until age 174 in order for the value of the Social Security benefits to exceed the value of the annuity payments.
Good post.
SS, Medicare, and the entire US Govt is little more than a ponzi scam.