No Way, Bernie!

The end of the year tax statements are starting to roll in. I got my W-2 from my side hustle and I noticed that the largest deduction for the year was for Social Security. There were also deductions for Medicare, federal tax and county tax. Even though I'm collecting Social Security, I still have to pay in and I pay federal tax on my distribution. I found a compound interest calculator online and ran some hypothetical numbers to see what things look like for the average wage earner such as myself.

Taking the number $48,000 to represent your average gross annual income for 50 years and investing 12.2% (the amount you and your employer pay into SS) at 5% interest compounded yearly, you will have deposited $298,656. With the theoretical interest you will have an account balance of $1,326,050. When you retire, depending on your age, if you get a benefit of $1,800 per month, that works out to $27,600 annually. That's not a lot to live on comfortably, especially if they take taxes out of that. Which they will. But, here's the kicker. If you divide your annual payout of $27,600 into your account balance of $1,326,050, you come up with 48. So if you started drawing your money at 65, you'll need to live to be 113 to get all your money back. Fat chance, brother. And that's not figuring on that $1.3 M earning any interest.

I would suggest all of you run your numbers to get an idea of what you'll have come retirement time. It's exceptionally difficult to get a decent return on your savings these days, which means you'll need even more money than the 5% I used above. And it will be extremely difficult to set aside 12% on your own when the various governments are taxing you to the tune of 25% or more.

It's getting real interesting now with the impeachment starting, the event yesterday in Richmond and the Presidential race starting in earnest. I won't presume to tell you who to vote for, but I'd think twice about anyone who is talking about free college and loan forgiveness, Medicare for all and any other "free" programs that they promise. Someone is going to pay for those things and it won't be the wealthy.