A lifetime of paying into Social Security nets you a check that barely covers rent. The government forces workers to contribute $9,932 per year, promising a future payout that maxes out at $3,627 per month if you wait until 65. A slow trickle, entirely dependent on whether the system still has enough cash. What if that same money was invested instead?
Historically, the S&P 500 has averaged 8% annual returns. If you invested $9,932 per year for 40 years, your portfolio would grow to $2.78 million. A standard 4% withdrawal rate would give you $9,263 per month, more than double the Social Security max.
Volatility? Sure. Markets rise and fall. But long-term, the S&P 500 has been far more reliable than government promises. Social Security isn’t an investment; it’s a transfer system, and the math keeps getting worse. By 2035, payroll taxes will only cover 77% of benefits.
Some might argue the stock market isn’t guaranteed. But neither is Social Security. With 10,000 baby boomers retiring every day and fewer workers paying in, future cuts are inevitable. Meanwhile, the S&P 500 has recovered from every crash in history. Which seems like the better bet?
