​Social Security Administration Raises COLA. Hurray?

It has recently been released by the SSA (social security administration) that the maximum earnings subject to the Social Security tax will increase to $127,200 per year from $118,500.  Last year there was no increase.
 
The result of these tax increases is $1,331.10 per year. 
 
The same press release noted that the COLA (cost of living adjustment) would be .3%.  As a result the typical retiree will receive a $5 per month increase in benefits.
 
Your Social Security “investment” is a horrible investment with a minimal to ZERO return on your “investment” over time.  It does not take long with a financial calculator for this to be seen.
 
For example; if you live 10 years (starting age is 67 today) on the maximum benefits ($32,244 per year) that annuity would be worth $318,000 at the time the payments start.  However, the value of an annuity of $15,774 per year (the maximum you are NOW being told to pay) for a 35 year work career invested at 2.5% (the current value of a 30 year treasury bond-considered the “safest” investment possible) would be worth $888,000!!
 
So, by my calculation the government is stealing $570,000 of your hard earned dollars ($888,000 - $318,000) over the course of your working life!
 
It is important for you to know that your social security benefit is NOT a contractual right. 
 
This issue was decided in 1960 by the U.S. Supreme Court in Flemming v. Nestor.  The Court emphatically stated that “…entitlement to Social Security benefits is not contractual…”
 
What is it then?  It is welfare pure and simple. 
 
The tax is a tax-not an investment.  And, the payments to retirees are just transfers of money from those who pay in to those who receive; because the system is NOW INSOLVENT.  There is no money there and there hasn’t been any money there since 1965 when the Johnson administration transferred the money into the general fund.
 
It is vital that YOU do not RELY on the government for your future well-being.
 
While we do NOT give investment advice, we DO help you plan a tax savings and WEALTH BUILDING strategy that will help you to be truly financially secure.
 
We encourage you to call us to set up an appointment to get started.