Taxing Social Security Benefits

The column is misleading since they completely overlook some basic considerations. The individual in their example worked 45 years and retired at age 65 after paying a total of $68,000 in Social Security taxes. This averages out to $1,511 per year that, in the absence of the Social Security system, the individual would have been able to put in an IRA, a savings account, stocks, or other investment for his retirement. At an average 5% interest rate compounded yearly over the 45-year period, he would accumulate $253,522. This would give him, at 5%, a retirement income of $12,676 per year, which is not too much different from the $11,500 per year paid him by Social Security. And in addition he would have the principal still in the bank; so he would have been better off without the Social Security system.

The Social Security system is, in effect, merely a means of forcing people to save for their retirement and should be treated as such.

R. C. ANDERSON

San Gabriel