One thing many people don’t realize, or don’t really believe, is that the Right is not intent on just tweaking government social programs such as Medicare and Social Security, but it wants to completely eliminate them forever.
Social Security is an extraordinarily successful program that, especially in these tough economic times, helps tens of millions of Americans every single month literally survive. However, even though it represents people working and saving and then getting those savings back, the Right wants to end it.
It goes without saying that one of the ways the Right is spreading false information is with PROP MAIL, or propaganda email that is spread and spread with the click of a forward button. We just got handed one such email.
Remember, not only did you contribute to Social Security but your employer did too. It totaled 15% of your income before taxes. If you averaged only $30K over your working life, that’s close to $220,500.
If you calculate the future value of $4,500 per year (yours & your employer’s contribution) at a simple 5% (less than what the govt. pays on the money that it borrows), after 49 years of working you’d have $892,919.98.
If you took out only 3% per year, you’d receive $26,787.60 per year and it would last better than 30 years (until you’re 95 if you retire at age 65) and that’s with no interest paid on that final amount on deposit! If you bought an annuity and it paid 4% per year, you’d have a lifetime income of $2,976.40 per month.
The folks in Washington have pulled off a bigger Ponzi scheme than Bernie Madhoff ever had.
One thing we’ve noticed about PROP MAIL here at Smoking Politics is that there are always some very basic “facts” that are touted loud and clearly that aren’t really facts at all and this email is full of them.
Starting right off the top, in the section I left in light green, payments to Social Security are combined 10.4% of your taxes between what you pay and what your employer pays. So that’s 10.4% not 15%. So if you work forty years, that’s $120,000 up front, 10% of $30,000 is $3,000 times 40 is $120,000 which is half of what this email claims which is $255,000.
The rest of this email is equally mathematically flawed. For example, it uses 49 years as the average time that a person works, which would imply a retirement age of 72, considerably higher than when the average American retires.
Despite long term bond rates hovering around 3%, it claims that 5% is ‘less than what the govt pays when it borrows.’ But really the 15% claim and the claim that you put away $255,000 in your career into Social Security right off the top, that’s the number that infuriates the recipient of this email, that’s the number that has them screaming about the government taking our money.
And it’s not true.