The Media and Social Security

  • Thread starter Thread starter jlw
  • Start date Start date
Status
Not open for further replies.
40.png
katherine2:
Your math is messed up, Vern. Use a calculator.

Your math is wrong.
Click to expand...
Vern, I looked for the posting where you have some figures, and I realized that maybe Katherine is referring to the excel spreadsheet you created. I know my way around financial calculations so I would love to look at it. PM me and I’ll send you my email address to look at the spreadsheet.

My gut tells me that Vern is right and Katherine is wrong. Heck, I just did a calculation assuming 40 years of working at $40,000/year (roughly $20 per hour). Even assuming a very modest growth of 5% (the market has exceeded that for every 40 year period in history). At the 12.4% withholding rate, you would have over $202,000 in an investment account after 40 years, and that’s excluding dividends.
 
40.png
StJeanneDArc:
Vern, I looked for the posting where you have some figures, and I realized that maybe Katherine is referring to the excel spreadsheet you created. I know my way around financial calculations so I would love to look at it. PM me and I’ll send you my email address to look at the spreadsheet.

My gut tells me that Vern is right and Katherine is wrong. Heck, I just did a calculation assuming 40 years of working at $40,000/year (roughly $20 per hour). Even assuming a very modest growth of 5% (the market has exceeded that for every 40 year period in history). At the 12.4% withholding rate, you would have over $202,000 in an investment account after 40 years, and that’s excluding dividends.
Click to expand...
I’ve sent you my email address by private communication – email me directly, and I’ll send you the spreadsheet.

At compound interest, 12% of 40,000 a year would yield about $610,000 over 40 years.
 
40.png
StJeanneDArc:
My gut tells me that Vern is right and Katherine is wrong. Heck, I just did a calculation assuming 40 years of working at $40,000/year (roughly $20 per hour). Even assuming a very modest growth of 5% (the market has exceeded that for every 40 year period in history). At the 12.4% withholding rate, you would have over $202,000 in an investment account after 40 years, and that’s excluding dividends.
Click to expand...
I don’t know about your gut, but my little pencil did the math on Vern’s numbers (you were kind to him to move away from his flawed numbers and change the figuring to something else, but one at a time, please). Using Vern’s sceberio, the person is better off by approximately $247/month under Social Security.
 
40.png
katherine2:
I don’t know about your gut, but my little pencil did the math on Vern’s numbers (you were kind to him to move away from his flawed numbers and change the figuring to something else, but one at a time, please). Using Vern’s sceberio, the person is better off by approximately $247/month under Social Security.
Click to expand...
Really!?!?

Let’s take 12%, and round down the return to 10%

Our $20,000 a year worker (making less than 2/3s of the national per capita income average – and less than the ARKANSAS per capita average) is now saving $200 a month.

After 40 years, that amounts to $1,264,793. Let’s round that down to $1.2 million.

Five percent of that is $60,000 a year, or $5,000 a month.

Now, who do you know who draws $5,247 a month on Social Security?http://forums.catholic-questions.org/images/icons/icon12.gif

This is like your claim that abortion wasn’t illegal when the Constituiton was adopted – so easy to refute that it’s amazing you even posted it.
 
vern humphrey:
Really!?!?

Let’s take 12%, and round down the return to 10%

Our $20,000 a year worker (making less than 2/3s of the national per capita income average – and less than the ARKANSAS per capita average) is now saving $200 a month.

After 40 years, that amounts to $1,264,793. Let’s round that down to $1.2 million.

Five percent of that is $60,000 a year, or $5,000 a month.

Now, who do you know who draws $5,247 a month on Social Security?http://forums.catholic-questions.org/images/icons/icon12.gif

This is like your claim that abortion wasn’t illegal when the Constituiton was adopted – so easy to refute that it’s amazing you even posted it.
Click to expand...
Thanks, Vern. This pointed out a mistake I made in my first calculation. I was using an old HP financial calculator that I hadn’t used in some years (too busy changing diapers and burning dinner for that) and I put in the interest rate as a decimal instead of the whole number. When I did your calculations correctly I come out with a future value of $1,270,000 after 40 years with a 10% interest rate.

Redoing mine correctly from the previous post actually gives a $40,000/year worker more than $2,102,000!
 
40.png
StJeanneDArc:
Thanks, Vern. This pointed out a mistake I made in my first calculation. I was using an old HP financial calculator that I hadn’t used in some years (too busy changing diapers and burning dinner for that) and I put in the interest rate as a decimal instead of the whole number. When I did your calculations correctly I come out with a future value of $1,270,000 after 40 years with a 10% interest rate.

Redoing mine correctly from the previous post actually gives a $40,000/year worker more than $2,102,000!
Click to expand...
Very clearly, Katherine’s “sharp pencil” needs re-sharpening.http://forums.catholic-questions.org/images/icons/icon10.gif
 
vern humphrey:
Really!?!?

Let’s take 12%, and round down the return to 10%

Our $20,000 a year worker (making less than 2/3s of the national per capita income average – and less than the ARKANSAS per capita average) is now saving $200 a month.

After 40 years, that amounts to $1,264,793. Let’s round that down to $1.2 million.

Five percent of that is $60,000 a year, or $5,000 a month.

Now, who do you know who draws $5,247 a month on Social Security?http://forums.catholic-questions.org/images/icons/icon12.gif
Click to expand...
You keep changing your examples, Vern, everytime your bad math is pointed out. First it was a minimum wage worker, now its a $20K a year worker. Your first flaw is that you have someone earning $20K for 40 years. Someone making $20K 40 years ago was doing pretty good. Go back to you rminimum wage example (oh, except then your point fails!) or use constant dollars. And of course, you don’t factor in any inflation protection for the future either. You will need much better than 5% return to do that. These are just some of your flaws; rework it Vern, and then I will point out the rest.

Don’t they teach math in the Ozarks?
 
40.png
katherine2:
You keep changing yoru exaples, Vern, everytime you bad math is pointed out. First it was a minimum wage workers, now its a $20K a year worker. Your first flaw is that you have someone earning $20K for 30 years. Someone making $20K 30 years ago was doing pretty good. Go back to you rminimum wage example (oh, except then your point fails!) or use constant dollars. And of course, you don’t factor in any inflation protection for the future either. You will need much better than 5% return to do that. These are just some of your flaws; rework it Vern, and then I will point out the rest.

Don’t they teach math in the Ozarks?
Click to expand...
That’s all well and good, Katherine. The whole point of the exercise is to show what could have been done with that money had it not been taxed away. Give me a salary history for an example person over the last 30 years, and I’ll tell you how much that 12.4% would be worth now.

Are you concerned at all about the young person making $20K now? Is he just supposed to see that 12.4% get frittered away? Do you think it’s just that a working father of 4 should see 12.4% of his income go into the government maw, be subject to waste, fraud and abuse, and have the remainder of that money wind up in the pocket of a millionaire? Do you draw social security?
 
40.png
katherine2:
You keep changing yoru exaples, Vern, everytime you bad math is pointed out. First it was a minimum wage workers, now its a $20K a year worker. Your first flaw is that you have someone earning $20K for 30 years. Someone making $20K 30 years ago was doing pretty good. Go back to you rminimum wage example (oh, except then your point fails!) or use constant dollars. And of course, you don’t factor in any inflation protection for the future either. You will need much better than 5% return to do that. These are just some of your flaws; rework it Vern, and then I will point out the rest.

Don’t they teach math in the Ozarks?
Click to expand...
Now, Katherine, dear, you’re just trying to cover up your own bad math.

I can show how people on Minimum Wage (actually BELOW minimum wage) come out way ahead. I can show how people making $20,000 come out ahead.

Now, given your mathmatical blind spot, let me explain something to you – Notice that in each calculation, we hold wages constant? The “workers” in my calculations never get an economic raise – their last paycheck buys exactly what their first paycheck would buy.

That’s called “adjusting for inflation,” or “using constant dollars.” (In fact, it over-adjusts.)

That means we can start at any point in history you like, take an income 2/3 (or lower) than the mean, and still show how much better off people would be saving and investing their own money.

Now, since you haven’t pointed out ANY flaws (other than pretending that stolen money isn’t really stolen if it’s used for something else – like the medicare slice of the FICA tax) I await your pointing out the first flaw.
 
I’m bumping this. The last 2 posts were added, but didn’t show up as unread. Please page up and look at the previous posts.
 
40.png
StJeanneDArc:
That’s all well and good, Katherine. The whole point of the exercise is to show what could have been done with that money had it not been taxed away
Click to expand...
Oh, you have a point? In every post you shift the numbers you are working with. C’mon. If you are going to pass the laugh test, stick with one example for more than a single post.

Now we started this with Vern’s claim about someone making the minimum wage. Let’s go back to that and follow it through. Or is there some reason you are afraid to be stuck with those numbers?
 
40.png
katherine2:
Oh, you have a point? In every post you shift the numbers you are working with. C’mon. If you are going to pass the laugh test, stick with one example for more than a single post.

Now we started this with Vern’s claim about someone making the minimum wage. Let’s go back to that and follow it through. Or is there some reason you are afraid to be stuck with those numbers?
Click to expand...
You didn’t answer my questions in the previous post.

If you can’t see the point numerous people are patiently trying to make, then I guess we should give up. I know you’re a Democratic party activist and have a vested interest in maintaining the statist status quo, so I’ll quit casting the pearls.
 
40.png
StJeanneDArc:
You didn’t answer my questions in the previous post.

If you can’t see the point numerous people are patiently trying to make, then I guess we should give up. I know you’re a Democratic party activist and have a vested interest in maintaining the statist status quo, so I’ll quit casting the pearls.
Click to expand...
Every one of your and Vern’s posts, Jeanne, moves the marker. Now before you have us scampering all over the place has you play hide the ball, why are you so resistant to go back to the first example proposed to me and follow through on the numbers? Afraid of something?
 
40.png
katherine2:
Oh, you have a point? In every post you shift the numbers you are working with. C’mon. If you are going to pass the laugh test, stick with one example for more than a single post.

Now we started this with Vern’s claim about someone making the minimum wage. Let’s go back to that and follow it through. Or is there some reason you are afraid to be stuck with those numbers?
Click to expand...
You keep saying that, as if the fact that we can calculate the results at ANY income levvel is somehow a flaw.

Yet you don’t show a single calculation of your own.

Pick any numbers you like, and I’ll show how simply allowing the workers to invest the Social Security SURPLUS will get us out of the Social Security hole in 33 to 34 years, and in 40 years will provide the average worker with an income equal to or exceeding his working wage.
 
vern humphrey:
Pick any numbers you like, and I’ll show how simply allowing the workers to invest the Social Security SURPLUS will get us out of the Social Security hole in 33 to 34 years, and in 40 years will provide the average worker with an income equal to or exceeding his working wage.
Click to expand...
Okay. I pick a husband working a minimum wage. Go ahead.
 
40.png
katherine2:
Okay. I pick a husband working a minimum wage. Go ahead.
Click to expand...
This person will pay about $1400 a year in social Security “contributions.” (actually, a bit more, but we’ll use the lower figure for convenience.)

If that money were invested at 10% return (well below a standard deviation under the mean), in 40 years he would have $841087. He could then transition to a guarenteed interst annuity. At 5%, he could draw an annunity of slightly more than $40,000. That’s well above the maximum allowable Social Security benefit.

Note also, Dear, we held his income constant – that is, constant dollars, and compensated (actually, over-compensated) for inflation.

By the way, do you REALLY advocate a man starting a family before he is able to discharge the associated responsibties?
 
vern humphrey:
This person will pay about $1400 a year in social Security “contributions.” (actually, a bit more, but we’ll use the lower figure for convenience.)

If that money were invested at 10% return (well below a standard deviation under the mean), in 40 years he would have $841087. He could then transition to a guarenteed interst annuity. At 5%, he could draw an annunity of slightly more than $40,000. That’s well above the maximum allowable Social Security benefit.

Note also, Dear, we held his income constant – that is, constant dollars, and compensated (actually, over-compensated) for inflation.
Click to expand...
Math and finance do not work that way Vern. 40 years ago, the minimum wage was $1.25/hour. That’s $2,600/year or $322 in Social Security contributions (I’m counting the employer match, which without a government mandate is not a sure thing). You are assuming a 10% return over and above inflation and wage growth. That’s Vern, is simply bad math.
By the way, do you REALLY advocate a man starting a family before he is able to discharge the associated responsibties?
Click to expand...
I didn’t know you were for family planning
 
40.png
katherine2:
Math and finance do not work that way Vern. 40 years ago, the minimum wage was $1.25/hour. That’s $2,600/year or $322 in Social Security contributions (I’m counting the employer match, which without a government mandate is not a sure thing). You are assuming a 10% return over and above inflation and wage growth. That’s Vern, is simply bad math.
Click to expand...
So if YOU say it’s bad math, show me the error!

By holding the wage constant (no economic wage), inflation is accounted for – in fact, over-compensated.

After all, you yourself first brought up the issue of “constant dollars!”
40.png
katherine2:
I didn’t know you were for family planning
Click to expand...
Now, Dear, not getting married until you can support a family is not condemned by the Church.
 
Vern,

I think the problem might be that if we compensate the wage to illiminate inflation then we must also compensate the rate of return for inflation as well. The problem I think is that 10% rate of return is too high to be considered a real rate of return. Perhaps the 5% is a good number I really don’t know. Can we get some representative real historical rates of return to eliminate this part of the argument. I really want to see how this figures out.

Kathrine,
You are correct in saying I was wrong about a figure that I used previously. I stated that if we allowed individules to privatly invest 4% of their wages that would be 1/4 of the present SS tax. (I was including the medicare tax in with the SS) The current payroll tax rate is 12.4%. That 4 % is just under 1/3 of the payroll tax (not 2/3 as you stated).

Thanks,
Jim
Jim
 
Status
Not open for further replies.
Back
Top