Celebrating Dependence

Later today a liberal "senior advocacy group" will be holding a "Birthday Party for Social Security" in Green Bay.  It was 79-years ago today that President Franklin Roosevelt signed into law the Social Security Act--and this group wants to "celebrate" the success of that program. 

One of the things they plan to "celebrate" is that "Social Security has helped to reduce poverty!"  They point to the fact that when SSI went into effect, more than 50% of US seniors lived in poverty and that rate is now about 10%.  That sounds impressive--until you recall that Social Security started in the throes of the pre-World War II depression when poverty rates across all age groups was much higher than it has been in the post-World War II economic boom.  As us Supply Siders like to say "A rising tide floats all boats."

They also will likely "celebrate" how Social Security "provides seniors with a sense of security about their retirement".  I'm guessing they won't be showing video footage of Congress debating cost of living adjustments every year.  I also doubt they will be discussing the projected income to outflow in the Trust Fund over the next five years--which according to the 2014 report from the SSA is NEGATIVE 77-BILLION DOLLARS!  And I can flat out guarantee that there will be little celebration of the fact that automatic withdrawals would have to increase by 7% per working American to fill in that deficit.

I am sure that there will be much "celebration" of the steady income Social Security has provided to retirees who "otherwise would have had nothing to live on in their Golden Years."  The average SSI payment is just over 12-hundred dollars a month per person--meaning a married couple who retire at 65 and live another 25-years can expect to get (with average cost of living adjustments of 2%) about $825,000.  That is a pretty good little "nest egg" isn't it?  But I took what my wife and I pay annually in SSI withholdings from our paychecks--a combined $4239--and figured out how much we would have if that money had instead gone into a Roth IRA every couple of weeks during our 40-year working careers and earned the S&P 500 average return since 1926: 11.69%.  That money going to Social Security would have earned my wife and me $2,983,832.81 by the time we were 65.  Yes, that is correct, by investing instead of relying on the Government to fund my retirement, my family would have an extra 2.1 MILLION DOLLARS!!!

Maybe we should go to the big Social Security Birthday Party with a cake that has 2.1 million candles on it to drive home the point about what you give up through government dependence. Although, having 2.1 million burning dollar bills on the cake would actually be a better representation.  Anyway, I think I'll pass on crashing the SSI party and use that time to instead double-check my math on the $1.1 MILLION I could have in my Health Savings Account if I hadn't had to pay into Medicare and Medicaid my entire life......