Tuesday, December 28, 2004
Social Security Outperforms DJIA
From the Christian Science Monitor:
One man's retirement math: Social Security wins At the heart of President Bush's plan to sell Social Security private accounts is a simple notion: You're always better off investing your retirement money than letting the government do it. By doing it yourself, you can stow some money in the stock market, and over the long run will get a better return on that investment than today's Social Security system offers. The idea is broadly accepted. That's why the administration's plan to partially privatize the system sounds appealing to many. But that better return won't always happen. Just ask Stanley Logue of San Diego. For 45 years, the defense-industry analyst paid into the system until his retirement in 1994. But with all the recent hoopla over reform, Mr. Logue, a Massachusetts Institute of Technology graduate, decided to go back and check his own records. Would he have done better investing his money than the bureaucrats at the Social Security Administration? He recorded all the payroll taxes he paid into the system (including the matching amount from his employer), tracked down the return the Social Security Trust Fund earned for each of the 45 years, and then compared the result with what he would have gotten had he been able to invest the same amount of payroll tax money over the same period in the Dow Jones Industrial Average (including dividends). To his surprise, the Social Security investment won out: $261,372 versus $255,499, a difference of $5,873.More at the link above.
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