For a possible answer to this question I turn to my friend AI.
Before jumping to a conclusion, consider that Social Security is far more than retirement income for the worker. It provides disability and survivor benefits, family benefits even benefits to ex and current spouses. It’s also guaranteed and risk free and not dependent on the stock market. It does not depend on consistent, responsible actions of an individual over forty years.
This scenario assumes the worker earns 35% of the Social Security taxable wage base each year from age 25 to 65 (a full 40-year career with steady covered earnings, no major gaps). For 2026, the taxable maximum is $184,500, so earnings = 35% × $184,500 = $64,575 in 2026 dollars. Earnings grow over time roughly in line with the national average wage index (AWI, recently ~$69,847 for 2024, with ~4-4.8% annual increases in recent years), maintaining the 35% ratio as the base rises.
This earnings level is close to the current U.S. average or median for covered workers (~$65,000–$70,000 range in recent data), placing the worker in the middle-income category for Social Security purposes—where the program’s progressive formula provides solid relative value.
Payroll taxes (OASDI portion only): 6.2% employee + 6.2% employer = 12.4% total on earnings.
Annual Contributions (Rough Illustration)
• In 2026: Earnings ≈ $64,575 → Total payroll tax ≈ 12.4% × $64,575 ≈ $8,007 per year (or $4,003 employee-only).
• Over 40 years, with wage growth (~3–4% nominal on average, tied to AWI), cumulative contributions accumulate as a growing annuity. In today’s purchasing power (real terms), annual contributions average roughly $4,500–$6,500 adjusted.
Private Investment Scenario
Assume annual contributions invested in a diversified portfolio (e.g., low-cost broad stock index funds with some bonds):
• Long-term real return assumption: 7% annually (conservative historical U.S. equity real return after inflation; adjust down for more conservative mixes).
• Accumulated nest egg at age 65 (today’s dollars): From the full 12.4%, roughly $650,000–$950,000 (typical range from 40-year simulations for average/mid-income earners; varies with market paths and exact growth).
• From employee’s 6.2% only: About half, $325,000–$475,000.
• Sustainable withdrawal: At a 4% safe rate (inflation-adjusted, aiming for 30+ years), this supports $26,000–$38,000 per year from the full amount (or $13,000–$19,000 from employee portion), plus options for principal drawdown or legacy.
Stronger returns (e.g., 8–9% nominal) boost this; weaker returns, higher fees, or poor timing reduce it. Volatility (e.g., crashes near retirement) is a major risk.
Social Security Benefits Estimate
For consistent earnings at ~35% of the wage base (solid mid-level), the progressive formula shines.
• Indexed earnings produce a moderate Average Indexed Monthly Earnings (AIME) — roughly $3,500–$4,500 monthly (for full-career at this relative level).
• Primary Insurance Amount (PIA) at full retirement age (67), using 2026 bend points: $1,286 (first) and $7,749 (second).
• 90% of first $1,286 ≈ $1,157
• 32% of amount between $1,286 and ~$7,749 (most of AIME falls here) ≈ $800–$1,100
• 15% of any excess over $7,749 ≈ $0 (little to none)
• Total PIA ≈ $2,000–$2,500 per month (or $24,000–$30,000 per year), plus annual COLAs after claiming.
This aligns with or exceeds the average retired worker benefit (~$2,000–$2,100/month recently, adjusted for 2026). Replacement rate: For ~$65k pre-retirement income (today’s equivalent), SS replaces ~40–50% — strong due to progressivity favoring middle/lower earners.
Comparison: Often Better with Social Security
• Financially (potential income): Investing the full 12.4% privately could produce comparable or somewhat higher retirement income under good market conditions (e.g., 20–40% more annually possible with solid returns). The employee’s 6.2% alone usually falls short or roughly matches SS.
• At this 35% level (near average earnings), the scales tip toward Social Security for most people when including real-world factors: zero market risk, automatic inflation protection (COLA), guaranteed lifetime payments, built-in disability/survivor benefits, spousal protections, and longevity insurance (no outliving your money).
• SS’s implicit real return is low (~1–3% for recent cohorts), but the guarantees and insurance value often outweigh higher-but-risky private returns for mid-income workers. Many analyses (SSA data, think tanks) show the current system delivers better effective outcomes for average earners than privatized accounts would, especially accounting for behavioral risks, fees, and lack of protections in private setups.
Bottom line for 35% of wage base: It’s close, but Social Security usually comes out ahead overall—particularly for risk-averse folks or those valuing certainty. Private investing the full taxes might edge it out financially in optimistic scenarios, but you’d sacrifice the safety net. The lower the earnings percentage (closer to average or below), the stronger SS performs relative to private alternatives.
As worker income rises, the theoretical benefit favors investing over SS as far as retirement income goes … assuming everything goes according to plan for forty years a rather unlikely possibility in my view.
QUINNSCOMMENTARY 
I agree with everything you reported in the initial post. It depends.
The results would be dramatically different if Congress had limited benefits generationally, to what each generation had funded. Instead, had the programs been properly funded, everyone born after 1960 who is paying income taxes is likely to be a loser compared to those born earlier – that’s because we have promised and spent so much more than the taxes we have collected.
There are funding deficits for Social Security, for Medicare Hospital Insurance trust funds. Had Social Security and Medicare been 100% pre-funded like a private pension plan, the total unfunded obligation (funding deficit) is projected to be approximately $78.3 trillion to $88.4 trillion over the next 75 years. These programs constitute nearly 100% of the long-term, non-interest federal unfunded obligations. And, then there is the $39+ Trillion national debt.
If you are a member of the “lost”, “greatest”, “silent” or the earliest born “Boomer” generations (those born between 1875 – 1950 who lived to collect), Social Security and Medicare were a good buy if your income was consistently below the median, or if your earnings record was mixed (less than 35 years of paying FICA and FICA-Med taxes) and if you lived to life expectancy or beyond.
That result was obtained because Congress created a structural failure by using Social Security and Medicare entitlements to buy votes among seniors, starting with the initial changes to Social Security during FDR’s administration, made much worse by changes during the Carter Administration, and George W. Bush with Medicare Part D.
The original Social Security Act of 1935, signed by President Roosevelt, primarily provided a federal, work-related retirement benefit system for workers aged 65 or older. It established monthly payments based on cumulative wages (minimum , maximum ) but excluded many occupations, such as agricultural and domestic workers, initially covering about half of the workforce. It did not provide any survivor or disability benefits.
So, if you were born after 1959, if you had FICA wages above the median, if you paid FICA wages and taxes for more than 35 years, if you survived to your Social Security Full Retirement Age of 67, and if you do not have a spouse in retirement, chances are you will have caused to be paid substantially more in FICA, FICA-Med and income taxes (and/or have a liability for debt) than the benefits you will receive from Social Security, Medicare Part A, Part B and Part D.
Caused to be paid includes not only the reduction in your paycheck from the FICA taxes you paid, but also the reduction in your wages from the employer contribution to FICA, taxes, and the foregone investment earnings on those monies.
A different result might occur if you die soon enough to avoid any reduction in Social Security benefits once the trust fund is exhausted, or if you die soon enough to avoid paying your “fair share” of taxes (as defined by our idiot politicians). That is, so long as we can continue to buy votes today and send the bill to future generations, old people with lower wage histories are likely to die before America’s federal and state governments are brought up short and forced to properly fund pay our national debt. How much?
The CBO projects our national debt will exceed $150 Trillion in less than 30 years, at current spending and taxing rates! $150+ Trillion! Once more, with feeling, $150+ Trillion! Add that to the Social Security and Medicare funding shortfalls.
You have to be old like me to be able to paraphrase Wimpy who used to say: “I will gladly pay you Tuesday for a hamburger today” into:
“I will gladly have someone else pay you someday for my Social Security and Medicare benefits today!”
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you would be better off in my opinion investing on your own with the employer and employee % we and employer now pay–but I suspect many folks have not a clue how to invest their money so maybe the current system along with 401-k and 403-B is more realistic.
Say someone this year took early retirement at age 62–1964 is year of birth–what might a stand alone retirement look like like if we just look at the numbers look .
84.75 S&P 500 at the end of 1964–2025 end of year 6,845.50 S&P 500 which is 80 times end of 1964.
Dividend in cash 1964 was $2.58 and last year $78.50 or 30 times the initial.
CPI has increased by a factor of 10 from CPI at 31.3 (1964)–to 326 last year.
I suspect if numbers were run it might exceed the close to $1 million given by brother Quinn, but I agree with the good brother it just might not work out for the average person. might be a good idea to have that SS (annuity) you can count on–recent proposal was no SS increases for folks with $100,000 benefit which apparently can and will happen going forward–you max out the benefit at $100,000.
Very interesting analysis–a good read.
By the way anyone beginning in year 2000 with the 4%+ 3% withdrawal formula in the INDEX (500) ran out of $ early last year–volatility plays a strange trick when you are in the distribution phase.
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