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Posted on 07/06/2026 10:11:19 AM PDT by lasereye
Dear Quentin,
If all my contributions, along with my employer’s contributions, had been invested in the S&P 500, my balance would be more than $4 million. I could take a very sustainable withdrawal rate of approximately $30,000 a month, assuming my long-term returns were 7%-8%.
If only my contributions were invested in the S&P 500, while my employer contributions went to the government, I’d have close to $3.7 million in the account at the end of this year, based on historical averages. I do better than many citizens because I’ve contributed at the highest level.
You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com.
(Excerpt) Read more at marketwatch.com ...
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I'm unsure about the claim that their account balance would be $4 million if the employer’s contributions were invested versus $3.7 million if only their contributions were invested. I was under the impression that the employer contribution is identical to the employee.
Of course it is.
Imagine if Socialist Security had invested our money in the stock markets. It would have trillions of dollars surplus instead of being trillions of dollars short.
The democrats fought Reagan tooth and nail to prevent 401k plans from being implemented.
LOTS of Americans are very glad the democrats failed.
The did the same with SDI. Said it wouldn’t work.
We would have been better off putting in our mattresses.
The funding mechanism for SS is a Ponzi Scheme in structure. It can’t work in the long term. It requires a very significant number of workers paying in vs beneficiaries taking out. Plus the beneficiaries must have a 1930s-1940s average life span.
Oh yes the money you pay in is not yours no matter how hard you scream it is. There have been several federal including Supreme Court decisions saying you have NO asset ownership in the money. If you had asset ownership you could leave it to your heirs. You can’t!
The whole point was to rip you off to support your parents. It was never about your retirement. With the crash in birth rates that scheme was financially unsustainable. Hence increased immigration. The problem with that has been the lack of sufficient domestic capability to assimilate them properly along with declining immigrant “quality.” Hence Trump’s redirection, filtration, and expulsions.
You’re paying SSA benefits to Jose’s Abuela from Mexico.
In fact she’s using your Social Security number and they don’t try to stop it.
My mom raised 7 kids at home, and then went to work as a legal-secretary after the last of us entered early teen years
She did this job for about 16 years before retiring. I calculate she probably contributed about $20-22K into social security
She then went on to live another 33 years. I estimate she drew at least $275K in benefits
Although she and Dad did raise 7 productive, tax-paying American citizens, with math like that, there is no way S.S. is not a government Ponzi-scheme.
If everyone “invested” their SS into the S&P 500, it would have inflated the SP so much that the market would not look anything like it is today. Valuations would be so far out of whack, the “value” of your investment would be nowhere near what they estimate.
And who would manage that? Having a Federal Bureaucrat sitting in on board meetings and driving earnings sounds very “commisar” like.
When people make suggestions like this, they never think past the initial thought. It’s like the government making changes to stuff without considering unintended consequences or any change in behavior.
I am sure the unions wanted to retain control over their pension funds.
That said, having billions of dollars move blindly into the system every payday—driven by people who don’t have the slightest concept of how businesses operate is kind of a crazy way to drive an economy. If the goal was to have Fidelity and Blackrock owning everything…I guess they succeeded.
He could have been self-employed, so counted both halves as his.
A lot has been broken.
This Social Security concept was originally intended only as a supplement.
More importantly never was the ridiculous level of inflation accounted for either.
Obviously the whole concept is flawed.
If we were to be mandated into funding a retirement account, it should have allowed for more personal control.
Instead our options for investment were much like our options for Covid treatment.
“Of course it is.”
I don’t think it’s broken. It was not set up as a mandatory savings and investment system. It was set up to take your money and give it to someone else.
The propaganda about it may have given you a different expectation, but they never expected you to catch on or be able to do anything about it if you did.
Depending on this persons income, I can absolutely believe 4 Million is realistic.
If you just put in the annual median income, for every year, a and the 13.3% (remember you only put in half if you aren’t self employed, your employer puts in the other half.)
IF you assume they started work at 18, and are now 67, making the absolute median every single year and 13.3% of every paycheck on 1st and 15th went into sp500, you are at nearly 1.5M.
If you earned the MAX contribution limit every year for those same years and put it 100% in SP500 at same schedule you’d be over $5 Million.
So, someone having over 4 Million if their SS went into SP500 vs SS, assuming they were making a good, not necessarily uber wealthy, but decent income, absolutely could see it being worth around 4M today over 39 years of contributions and the SP500’s overall returns.
As note, the structure of Social Security is indeed that of a Ponzi scheme - today’s “contributors” are paying current beneficiaries. Unless the contributors numbers and/or contributions increase from current levels, OR if the number of beneficiaries or their benefits is reduced, it will go severely in the red as soon as 2032.
If Social Security contributions had been segregated into individuals’ own accounts, and invested in a diversified basket of US stocks, these accounts would surely cover the retirement income needs of its participants - the ones that make it to retirement, contributing (taxed) all along the way. But this is an incomplete picture.
Social Security also includes a social safety-net aspect - call it social insurance. This is where disability benefits come from. Also, survivor and spousal benefits. So it’s not a complete picture until you consider benefits paid out over and above monies paid in for folks that die or become disabled before reaching their full retirement age.
But, even with that, it’s still not a good vehicle when viewed as an investment vs. market returns INCLUDING if you allocated some portion of the contributions to private life and/or disability insurance premiums.
If it had all been privatized, with individual accounts, it would have easily remained solvent, and we’d all enjoy very nice retirements.
The insolvency train is barreling down the tracks, and no US Congress has been willing to take it on for decades. They’ve just kicked the can down the road - again, and again.
The system is working splendidly just like it’s supposed to.
It’s stolen around 3.5 million of your 4m valuation.
And you’ll still be taxed on the remainder
It’s prevented you from building findncisl independence and probably rendered you dependent on the political ruling class.
It’s worked just fine.
DJIA
1964 874.13
1972 1,020.02
1982 1,046.54
1989 2,753.20
1999 11,497.12
2007 13,264.82
2020 30,606.48
2025 48,063.29
https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average
Bing quote:
52,892.32
In 1964, the US economy led the world pretty much across the board.
Prices have gone up by a factor of about 10 and our population has doubled. Adjusting for that the average might be around 17,000, if the US was still generally the top dog.
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