This is a fascinating discussion and one that really highlights the tradeoff between guaranteed security and market opportunity. Dan's and Rick’s calculations are impressive and certainly demonstrate the power of compound growth, but I think it's important to consider both the math and the behavioral side of things. Yes, if every FICA dollar had gone into an S&P 500 fund since the '70s, many of us would be sitting on seven-figure accounts. But the market isn’t a straight line. Would the average person stay the course through the crashes of 2000, 2008, or even 2020? Probably not. Behavioral risk panic selling, poor timing, or under-diversification can quietly erode long-term returns. Also, we can’t ignore the insurance aspect of Social Security. It's not just a retirement benefit, it’s also disability coverage and survivor insurance. Those protections are often overlooked in these comparisons but can be vital for families, especially in lower-income brackets. That said, I do like seeing these "what-if" scenarios. They’re not just hypothetical, they push the conversation forward and help people understand where their money is going and what the opportunity costs are. If you're diving into retirement planning or simply trying to run your own numbers, tools like the End of Service Calculator can help model different payout or investment outcomes over time. It’s not SS-specific, but it’s flexible enough to help with general benefit comparisons or retirement forecasting. At the end of the day, a diversified approach is likely the most prudent counting on SS for a base and using private accounts (like IRAs or 401(k)s) for growth and customization. I only wish we had the option back in the day to choose our path. But given where we are, transparency and education are the best tools we've got.
Comments
This is a fascinating discussion and one that really highlights the tradeoff between guaranteed security and market opportunity. Dan's and Rick’s calculations are impressive and certainly demonstrate the power of compound growth, but I think it's important to consider both the math and the behavioral side of things. Yes, if every FICA dollar had gone into an S&P 500 fund since the '70s, many of us would be sitting on seven-figure accounts. But the market isn’t a straight line. Would the average person stay the course through the crashes of 2000, 2008, or even 2020? Probably not. Behavioral risk panic selling, poor timing, or under-diversification can quietly erode long-term returns. Also, we can’t ignore the insurance aspect of Social Security. It's not just a retirement benefit, it’s also disability coverage and survivor insurance. Those protections are often overlooked in these comparisons but can be vital for families, especially in lower-income brackets. That said, I do like seeing these "what-if" scenarios. They’re not just hypothetical, they push the conversation forward and help people understand where their money is going and what the opportunity costs are. If you're diving into retirement planning or simply trying to run your own numbers, tools like the End of Service Calculator can help model different payout or investment outcomes over time. It’s not SS-specific, but it’s flexible enough to help with general benefit comparisons or retirement forecasting. At the end of the day, a diversified approach is likely the most prudent counting on SS for a base and using private accounts (like IRAs or 401(k)s) for growth and customization. I only wish we had the option back in the day to choose our path. But given where we are, transparency and education are the best tools we've got.
Post: Social Security vs. Private Investment Accounts – RCC runs some numbers.
Link to comment from June 14, 2025