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I am constantly bemused by comments that I see in articles about Social Security where the commenters claim that they will never recover their and their employers' FICA OASDI contributions. I and my employers' contributed to FICA OASDI for 54 years. It took less than 7 years for me to receive the equivalent amount in benefits.

Social Security tax rates and the income base that is subject to the tax have gone up substantially since you started working. In addition, thanks to the ‘bend points’ in the formulas used to calculate benefit levels, folks with higher income levels get a lower rate of return than those with lower income levels. Also, under current law, if nothing is done to shore up Social Security, the program will not be able to pay its full benefit levels starting around 2035.

Put all those factors together and it gets fairly straightforward to get to a lousy expected return rate from Social Security for many people fairly new to the workforce. Add some less than idealized life expectancy assumptions to the mix (ie: both my grandfathers died around age 70), and the calculated expected return rates from Social Security for higher income younger workers can get very negative, very quickly.

Discovery/HR Home Fool
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