Submitted by tom on
For those who actually have the stomach for it, the following are rates of return one can expect on their Social Security contributions:
- Low Earnings Level: 2.8 percent
- Average Earrnings Level: 1.8 percent
- High Earnings Level: 1.2 percent
- Maximum Taxable Earnings Level: .4 percent
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A CPA replied on Permalink
I think your rates might be
I think your rates might be high.
I calculated what I can expect, getting my projected benefit from the SS website. Assuming I work until 67, and die when I'm 76, my return will be -1.26%. This is the return that sets the NPV of my cash flows to zero. I assumed that COLA's would be 3% per year in retirement. I also carved out the "premium" relating to disability protection and survivors benefits.
This program is a crock. And it needs to be phased out.
tom replied on Permalink
Social Security Returns
Thanks for the feedback.
My data is pretty high-level and may be a bit dated.
Pulled it from a Wharton paper that was written a few years ago.