I thought I'd take a shot at doing some analysis of how people would have fared if they had the opportunity to invest their hard-earned social security money in the evil, risky, Republican scheme known as "privatization".
Surely, after recent events, this would show the problems with the plan and how the Democrats "saved" retirement for millions of Americans.
So I entered some data in a spreadsheet (many of you know what a numbers geek I am) and plotted out what has happened since this plan could have taken effect back when President Bush's first fiscal budget when into effect October 1st, 2001.
My calculations involved investing the employee's share (6.2% of their income) for someone making $50,000 per year in an S&P 500 Index fund (considered by many to be representative of "the market"). I did not perform any calculations for the employer's share (another 6.2%) and assumed this would stay in the current social security system. This makes the total "risk" no more than 50% of the funds contributed.
After enduring the "worst economy since Hoover", rising unemployement, an "illegal and expensive war", the collapse of the real estate market and the total failure of some of the biggest financial companies in the world, I was certain that all of this perosn's money would have been flushed down the drain.
What I found was nothing short of amazing. From October 1, 2001 to today's market open, this hypothetical person would have contributed $21,958.33 to their personal account. Their balance today would have been $23,679.20 - a GAIN of $1,720.87. Not much of a gain, mind you - but the amazing thing is this:
This paltry gain in one of the worst economic and stock market environments in our country's history still BEAT the gain that this worker received through the "safe and protected" current version of the Social Security system.
How bad does the current system have to be in order to actually perform WORSE than money invested in the stock market during these horrific events?
Click the graph below for a larger image.
Surely, after recent events, this would show the problems with the plan and how the Democrats "saved" retirement for millions of Americans.
So I entered some data in a spreadsheet (many of you know what a numbers geek I am) and plotted out what has happened since this plan could have taken effect back when President Bush's first fiscal budget when into effect October 1st, 2001.
My calculations involved investing the employee's share (6.2% of their income) for someone making $50,000 per year in an S&P 500 Index fund (considered by many to be representative of "the market"). I did not perform any calculations for the employer's share (another 6.2%) and assumed this would stay in the current social security system. This makes the total "risk" no more than 50% of the funds contributed.
After enduring the "worst economy since Hoover", rising unemployement, an "illegal and expensive war", the collapse of the real estate market and the total failure of some of the biggest financial companies in the world, I was certain that all of this perosn's money would have been flushed down the drain.
What I found was nothing short of amazing. From October 1, 2001 to today's market open, this hypothetical person would have contributed $21,958.33 to their personal account. Their balance today would have been $23,679.20 - a GAIN of $1,720.87. Not much of a gain, mind you - but the amazing thing is this:
This paltry gain in one of the worst economic and stock market environments in our country's history still BEAT the gain that this worker received through the "safe and protected" current version of the Social Security system.
How bad does the current system have to be in order to actually perform WORSE than money invested in the stock market during these horrific events?
Click the graph below for a larger image.
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