# Social Security: Input vs. output
**URL:** https://boards.straightdope.com/t/social-security-input-vs-output/670981
**Category:** Factual Questions
**Created:** [October 11, 2013, 2:21pm UTC](https://boards.straightdope.com/t/social-security-input-vs-output/670981 "2013-10-11T14:21:41Z")
**Posts on this page:** 10
**Page:** 2
### Author:  [@barbitu8](https://boards.straightdope.com/u/barbitu8)
#### Post date: [October 11, 2013, 11:29pm UTC](https://boards.straightdope.com/t/social-security-input-vs-output/670981/21 "2013-10-11T23:29:30Z")
> [@NeonMadman](#):
>
> And that would be great, if participation in SS were voluntary. By forcing me to participate in SS, the government has taken money that could have produced a ROI for me, and put it into what is essentially a Ponzi scheme - current contributors are being used to pay off earlier contributors. If a private business ran like SS, the principals would be in jail.
>
> It also seems inconsistent to me to call it insurance - insurance is taken against something that may or may not happen. My car insurance is issued in case I have an accident. Medical insurance is something I have in case I get sick. Anyone who lives long enough (i.e., doesn’t tragically experience an early death) will certainly reach retirement age. Therefore SS seems much more akin to a pension than an insurance policy, from where I sit.
You are right. SCOTUS ruled that SS is not insurance, in order to decide it was constitutional. But it is referred to as insurance even by SS.
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### Author:  [@doreen](https://boards.straightdope.com/u/doreen)
#### Post date: [October 11, 2013, 11:46pm UTC](https://boards.straightdope.com/t/social-security-input-vs-output/670981/22 "2013-10-11T23:46:22Z")
> [@barbitu8](#):
>
> You are right. I misspoke, but those taxes (before age 21) do not factor in to your PIA.
I believe it’s calculated on your highest 35 years of earnings which would in _most_ cases exclude earnings before age 21 but wouldn’t necessarily exclude the under-21 earnings of someone who earned more as a teenager than they later earned as an adult. (model,actor, athlete, left the workforce at 25, etc)
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### Author:  [@barbitu8](https://boards.straightdope.com/u/barbitu8)
#### Post date: [October 11, 2013, 11:49pm UTC](https://boards.straightdope.com/t/social-security-input-vs-output/670981/23 "2013-10-11T23:49:49Z")
No. IIRC it does not include wages before age 21. When I have more time I will research it.
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### Author:  [@jasg](https://boards.straightdope.com/u/jasg)
#### Post date: [October 12, 2013, 12:44am UTC](https://boards.straightdope.com/t/social-security-input-vs-output/670981/24 "2013-10-12T00:44:58Z")
> [@Ludovic](#):
>
> It’s important _now_, because I have paid more than 6
> figures into the fund and do not think it equitable if I should receive much less than the baby boomers when I retire.
Have you tried to estimate your SS income? Here is the [calculator](http://www.ssa.gov/estimator/)
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### Author:  [@Ludovic](https://boards.straightdope.com/u/Ludovic)
#### Post date: [October 12, 2013, 1:03am UTC](https://boards.straightdope.com/t/social-security-input-vs-output/670981/25 "2013-10-12T01:03:28Z")
> [@jasg](#):
>
> Have you tried to estimate your SS income? Here is the [calculator](http://www.ssa.gov/estimator/)
Yes. That’s the current calculations, which everyone knows will not be able to hold as long as SS is expected to be self-funding. I know that I will almost certainly not be getting what it says I should be getting according to the calculations. And I know that it is going to be a lot less than the baby boomers are getting. I am just hoping that it isn’t so drastic a reduction that it amounts to basically nothing.
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### Author:  [@jasg](https://boards.straightdope.com/u/jasg)
#### Post date: [October 12, 2013, 1:24am UTC](https://boards.straightdope.com/t/social-security-input-vs-output/670981/26 "2013-10-12T01:24:55Z")
I guess I am an optimist.
I am a boomer who expects to live another 20 years and I do not expect a decrease (like the 77% in 2033 shown on the estimator page) in benefits. There are simple fixes to be made and congress has done such before.
I just ignore the SS gloom and doom and political posturing that has become a tradition on Capitol Hill…
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### Author:  [@barbitu8](https://boards.straightdope.com/u/barbitu8)
#### Post date: [October 12, 2013, 2:00am UTC](https://boards.straightdope.com/t/social-security-input-vs-output/670981/27 "2013-10-12T02:00:02Z")
> [@doreen](#):
>
> I believe it’s calculated on your highest 35 years of earnings which would in _most_ cases exclude earnings before age 21 but wouldn’t necessarily exclude the under-21 earnings of someone who earned more as a teenager than they later earned as an adult. (model,actor, athlete, left the workforce at 25, etc)
> **[Code of Federal Regulations § 404.221](https://www.ssa.gov/OP_Home/cfr20/404/404-0221.htm)**
>
> Computing your average monthly wage.
> [@](#):
>
> (c) Number of years to be considered in computing your average monthly wage. To find the number of years to be used in computing your average monthly wage—
>
> (1) We count the years beginning with 1951 or (if later) the year you reached age 22 and ending with the year before you reached age 62, or became disabled, or died before age 62.
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### Author:  [@OldGuy](https://boards.straightdope.com/u/OldGuy)
#### Post date: [October 12, 2013, 2:08am UTC](https://boards.straightdope.com/t/social-security-input-vs-output/670981/28 "2013-10-12T02:08:19Z")
> [@NeonMadman](#):
>
> It also seems inconsistent to me to call it insurance - insurance is taken against something that may or may not happen. My car insurance is issued in case I have an accident. Medical insurance is something I have in case I get sick. Anyone who lives long enough (i.e., doesn’t tragically experience an early death) will certainly reach retirement age. Therefore SS seems much more akin to a pension than an insurance policy, from where I sit.
In part it definitely is insurance. You can collect Social Security if you get disabled young. This is just like private disability insurance. Also your benefits continue as long as you live. This is like a private insurance industry’s annuity contract. Both of those are definitely types of insurance.
And has been pointed out by others, when you compare what you get back in retirement to what you put in, you should not really count that portion of your payments that were used to “purchase” your disability insurance.
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### Author:  [@Voyager](https://boards.straightdope.com/u/Voyager)
#### Post date: [October 12, 2013, 8:27pm UTC](https://boards.straightdope.com/t/social-security-input-vs-output/670981/29 "2013-10-12T20:27:12Z")
I think it is factual to say that the average RoI of SS is lower than the market. That’s because the investment is safer, which is a good thing.
Those wishing for a more voluntary system should look at what is happening with 401Ks. Not allowing people to take money out of SS is a good thing, especially in times of economic upheaval.
Some countries have mandatory retirement plans that go into a selection of more regular investments. Thaler and Sunstein in _Nudge_ show that people make bad investments - basically buying at the top. But a bigger problem for the US is that all that money will distort the markets. Plus, any subset of investments which will get SS donations will rise in price because of greater demand, so the incentive for corruption would be tremendous.
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### Author:  [@Shodan](https://boards.straightdope.com/u/Shodan)
#### Post date: [October 12, 2013, 9:11pm UTC](https://boards.straightdope.com/t/social-security-input-vs-output/670981/30 "2013-10-12T21:11:55Z")
> [@Voyager](#):
>
> I think it is factual to say that the average RoI of SS is lower than the market. That’s because the investment is safer, which is a good thing.
It is also factual to say that part of the reason for the lower RoI is that participation is mandatory, so they don’t have to compete with other investments.
It is also factual to say that the RoI is lower because it is safer. However, this is not always a good thing. Some of us are willing to tolerate a higher rate of risk to get a better RoI. Historically, this has been borne out by the history of the markets since the Great Depression. The market nearly always outperforms Social Security over almost any period ([cite](http://www.cato.org/pubs/ssps/ssp2.html). Even if you put the money into Treasury bills you would do better ([cite](http://www.heritage.org/research/reports/1998/01/social-securitys-rate-of-return)). Keeping also in mind that if you die before retirement, the RoI for you and your estate is zero. (I assume no one needs a cite on that.)
Since we are still in GQ, I suppose we need only note that the answer to the OP is that, on average, retirees currently get back more than they put in. That will probably change in the future.
Regards,
Shodan
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