About that Money You’ve Been Paying Social Security

“I wish I had all the money I’ve paid into Social Security. I’d be rich.”

Over the years, I’ve had one or two (hundred) folks say something like that to me. 

Recently I got so curious, I decided to run the numbers. On myself.

(By the way, did you know you can go to the Social Security website, www.ssa.org, create an account, see your payment history, and get an estimate of the Social Security benefits you can expect at retirement? It’s free. I highly recommend you do it.)

Here’s what I discovered.

In my first part-time job, I earned $1100—and paid $72 in Social Security payroll taxes. Not bad for a high school kid folding socks in the men’s department! 

In my first year of full-time employment, I earned a whopping $22,000. About $1300 of that went to Social Security—which is serious money when you’re only earning $22,000! 

The SSA website told me that in my entire work career, through 2020, I’ve paid $186,000 into the system. 

Meaning: If I retired today, I’d get $2300 per month. And if I’ll agree to wait until age 66 (and 10 months), Social Security will pay me $3200 per month. 

My wife says she still likes me, but not enough for me to be hanging around the house all day. So, I’ll likely work to age 70. By waiting till then, Social Security says they’ll pay me $4100 per month.

But wait! There’s more! All the above numbers are increased by 50% because Social Security also promises to pay my wife a spousal benefit. 

The first thing I observe is how quickly I can recoup the $186,000 I paid into the system over 40+ years. If I retired today, I’d get my money back in less than five years. If wait until age 70, I’ll get all my money back in only about two and a half years! 

It’s tempting to think, “If only I could have kept all that money through the years and invested it myself. Why, I’d be like Warren Buffett!” 

But I know myself—and a little something about human nature. I didn’t have the life experience that I do now. It’s a sure bet I would NOT have been a disciplined investor all those years (which is probably why the Warren Buffetts of the world are so few and far between).

And that’s why Social Security is a good thing.

Social Security provides a baseline of household income for the majority of American retirees. Many live on Social Security and whatever minimum amount they are required to take from their retirement plans. They’re not rich. But they’re not destitute either. 

To be sure, for things to keep working like this, changes will need to be made to Social Security’s funding formula. According to current estimates, Social Security has only enough money to pay benefits in full until 2034. At that time, there will only be enough funding to cover 78 percent of promised benefits. 

My guess is that those changes will be made at the last minute. To paraphrase Winston Churchill, Congress will eventually do the right thing…after they have tried everything else. 

In the meantime, you and I need to be getting the other aspects of our financial lives in order. That way we can add to the baseline of household income Social Security provides.

A great way to get started is by reading my new e-book “How to Put Money Worries in Your Rear View Mirror.” It’s for anyone who feels lost when getting ready for retirement. This e-book/financial roadmap is free to anyone who emails me at bmoore@argentadvisors.com.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

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