Financial Planning Fridays #87: A Fun Look at Social Security


We wanted to take a fun look at something that all of us are part of in some way—social security.  

This year, more than 68 million Americans will receive $1.5 Trillion in social security payments. In order to fund this, we all pay a portion of our income into the social security program that our employers match. 

Right now, most of the funds collected go to pay current benefits and are not invested for the long term.  However, just for fun, let’s imagine that our social security taxes were invested instead in the 500 largest public companies in the United States.   

In doing so, this would allow every working person in America to become an owner and participate in our amazing future innovation and growth.  

For someone who just retired this year and spent the past 40 years paying the maximum amount into social security, it would have looked like this:

  • You and your employer would have paid a total of $438,646 into Social Security.
  • If you then retired this year, you would begin to receive the maximum social security benefit for 67 year olds of $3,743 per month or almost $45,000 per year.

However, If those same social security taxes had instead been invested for you in the S&P 500 index over that time, you would now be entitled to almost $4.2 Million.

  • If you just received the dividends as income at the average rate for the past 40 years, you would receive 2.34% or a little more than $97,000.
  • That dividend income would then likely continue to grow faster than inflation and allow you to purchase more and more every year of your retirement. 
  • The remaining principal after a 30-year retirement, that your family or favorite charity would be left with, would be more than $20 Million! 

While it’s unlikely this idea will ever be implemented, it would be nice to find some way to have every American participate in the amazing long-term growth of our largest companies. 

Be on the lookout for our next Financial Planning Fridays episode. Subscribe to our Youtube Channel so you never miss an episode. Or contact us directly; schedule your 15-minute call with us today.