2026-03-17

You'd be better off without Social Security

This screenshot was taken straight from https://www.ssa.gov/about-ssa. And while, yes, our Social Security program does provide some level of financial protection, it's far inferior to what you could do for yourself. Yes, Uncle Sam "can help you through all life's journeys," but not better than you can help yourself.

"Social Security (SS) is going to supply my income when I retire."

Ok, perhaps. Let's have a look at how much you'll receive from SS:

The average SS payout for retirement benefits is $2,071,[ref] or about $24,852/yr. Given the average life expectancy of 79 in the USA,[ref] and assuming you started drawing SS benefits at age 62, you'd expect to receive from SS:

[(79 - 62 = 17) years to benefit] x $24,852/yr.

= $422,484.00 from SS back to you

in your lifetime. Not bad, right?! You work your whole life, keep your head down, pay your dues; and when you retire, Uncle Sam gives you nearly $425k on average!

But, what did that cost you?

Ok, so you're going to get $425k back from SS; but how much did you put in? Is it just a savings account-- implying you postponed $425k of earnings throughout your career-- or are you getting a bargain from Uncle Sam? 

Once again assuming an average Joe career worker, we can calculate the amount you paid into SS in order to get your payout:

You give about 6.2% of your wages,[ref] your wages are around $70k/yr,[ref] and you pay in for about 40 years.[ref] Put it all together:

($70,000/yr income) x (40 yr career) x (.062 taken for SS)

= $173,600.00 was all you put into SS

So you only paid in $174k, and you're getting out $425k! In other words, about a quarter of a million dollars (around $250k) in pure profit! You'd be stupid not to take that deal, right??

Actually, only an idiot would take that deal.

Throughout your 40 year working career, we assumed you contributed to SS every year:

($70,000/yr income) x (.062 taken for SS)

= $4,340.00 put into your SS account each year

But what if, instead of giving your hard earned money to Uncle Sam to hold until you retire (a fancy savings account), you took the exact same amount of money and just invested it yourself instead?

In basic mutual funds and simple investing-- no need to spend hours every week pouring over the latest business trends-- you'd expect about a 6.5% return on your money,[ref] when "saved" in stock investments instead of SS.

A compound interest calculator is helpful for figuring out the amount you'd build up over time. Here's one workup:

So you pay in the exact same amount ($173k), in the exact same frequency ($4,340/yr.), but this way you make over $762k!

Let's put that in perspective

Check out how your personal investing would stack up against what you're expecting from SS:

Compared against SS, you could:

• Take home $340k more dollars than Uncle Sam will give you.

• Give up only $2,410 per year (instead of $4,340) if you're satisfied with the SS-level payout.

• Have an extra $1,600 per month for your expected remaining lifespan.

• Or, live an extra 14 years at the same retirement wage being paid to you by SS.

Food for thought

Is Uncle Sam really that bad at investing-- to only get you a 1.4x ROI when everyone else can get 3.4x?

Why do you need the government to hold money for you in a savings account, when savings and investment accounts are readily available to common citizens already?

Assuming our government is not as bad as they seem at investing your money, where's all the excess going? Assuming they actually profitted the same $589k that you would have-- but they only give you $249k of it-- where is the rest of the money? What's it being spent on?

Are we giving our money to Uncle Sam or Big Brother?

Is Social Security a plan to give our fellow man something he doesn't have and can't get for himself; or just another way to profit off the back of his hard labor?

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