A solid deal for me

The “CloseUp” article “Social Security isn’t the deal it once was” [News, Aug. 6] asserts that Social Security is not a good investment. I disagree. For the money my employers and I have paid in, I will get a very reasonable return.

Here is how I figured how valuable Social Security is to me, or, stated another way, how good an investment has it been for me.

I took my SS earnings off the statement that I just got from the Social Security Administration. It lists the years I paid in and it shows how much I earned for each of those years. The statement also reports how much I have paid in SS premiums as well as how much my employers have contributed. (For me, the total amount is $206,802 through 2011.) I took the total amount (my payments plus my employers’) and estimated how much I paid in per year. My statement also tells me how much I would get paid per month if I started drawing on SS today.

Then I did some “what ifs” with varying rates of return while 1) I was paying into SS, and 2) that I might get as SS started to pay me. I assumed that I will draw on SS for 25 years, until I am 90 years old.

I found that if I assumed I was getting a 4.5 percent rate of return while paying in, and that my annuity will similarly pay 4.5 percent while I draw on SS, then it all balances out: the savings stream comes up with enough money to support the annuity. If I plug in a lower rate of return for my years of paying in, then the rate of return on the annuity consequently goes up, and vice versa.

Standing back, those rates of return look like pretty good numbers to me. Those of us in the 99 percent cannot get those returns on savings accounts, CDs or money market accounts. There is as little risk here as for any investment anywhere, and if I live longer, I do even better. If I die earlier, my return goes down, but that is what insurance is about: My fewer years of drawing will pay for someone else’s longer run of life.

— Peter House, Seattle