NCPA - National Center for Policy Analysis

Social Security Gyps Many

March 9, 2000

Having been forced to pay their Social Security taxes their entire working lives, many retirees find they don't have much to look forward to under the present system -- which is also lurching toward bankruptcy. Critics urge those beneficiaries to compare the following data with the fact that the average historical return on stock funds has been 7.56 percent a year.

  • The best a low-income worker can expect in Social Security benefits is 58 percent of his or her pre-retirement income, while average income workers can expect only 43 percent. However, retirement planners say seniors need an income of 60 percent to 85 percent of pre-retirement levels in order to maintain their standard of living.
  • Real returns on Social Security for low-income workers come to 2.75 percent above taxes paid.

For higher-income workers the returns are even lower -- and for those in upper income brackets, the returns are negative.

Source: Editorial, "Silence of the Political Lambs," Investor's Business Daily, March 8, 2000.


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