Social Security Taxes — Bad Investment?

Orignally, Social Security was a really good deal.  For example, if a person turned 65 in 1960, a $36,000 investment (Social Security taxes) yielded $259,000 in benefits assuming a statistically average lifespan.

However, things are wildly different now.  If you turned 65 in 2010, a $588,000 investment will yield only $555,000 in benefits. 

And, things get even worse for younger folks.  If you will not turn 65 until 2030, a $796,000 investment will yield just $699,000 in benefits.

As you can see, investing in Social Security would not satisfy the Prudent Investor Rule and would subject a trustee to personal liability for breach of fiduciary duty.

For more information, see Stephen Ohlemacher, Social Security not deal it once was for workers, Associated Press (Aug. 6, 2012) and Associated Press, Social Security: How much I pay, how much I get, Huffington Post (Aug. 6, 2012).