Hey everybody! My macro economics teachers has taught our class one of the most important thing i could learn. The biggest debate for my generation when we get out of college, is what to do with social security. First implemented in the late 40'* after the war by roosevelt, it was said by FDR himself, it was a bad idea. We all know about the baby boom, and everything.
In social security all the money that comes in, just goes to other govt organizations, etc, and when there'* only enough left for the IOUs that the SS administration has, they'll have to stop. Right now everyone pays about 6.25% on social security from every dollar they make.
Most of you may know, but the younger people here wont. in 98 the Government set up Roth IRA retirement funds. You put up to the limit (3000 no, 5000 by 200
a year into this account. They have earned an 11-12% return every year thru investing by the govt. It'* completely Tax free, free to you, and easy to do. @ 10% yearly return, your money doubles ever 7 years about.
I challenge you all to do this. Go to www.ssa.gov
, find the calculator that tells you what your benefit will be. for 90% of you it'll be about 1700-2200 a month.
Go to any Roth IRA calculator online, and plug in $3000 year (this years max) a 10% return (average is 11-12%) and then figure it out. I put in the $3000 a year, not even accounting for 5000 after 2008, and i got $2,372,368. I don't know about you, but i could live off the 10% interest from that @ 230,000 a year.
1700/mo or 230,000 a year? You can't run money into the gov't and expect a good return, govt overhead sucks it all out. I'd suggest to anyone, start doing Roth IRAs, or normal IRAs even. Normal ones are taxable i think, but most companies will match you dollar for dollar.
There are two arguments with Social security though. Some people say we're taking away money from those who will live off of it. A one time deposit into a Roth IRA will net you about a million dollars by 65. Should we make people more responsible for their money? Or shuld we all keep doing it. I think making an option to do your 6.2% go to Roth OR social secuity. Bush touched the issue, and got chased away, but he touched it atleast. I don't agree with bush a lot, but he started it atleast.