Kent Burgener’s letter (Voice, April 16) on the funding options for Social Security overlooked one key fact. He contended that if someone invested minimum-wage Social Security taxes ($87.83 a month) at 6 percent interest, the investment would grow to $174,912.61 over 40 years. He then figured that investment of the bonanza at 6 percent interest would produce an annual income of $10,494.75-forever.
It sounds too good to be true-and it is. He conveniently ignored inflation. During the past several decades, the average annual rate of inflation has been 4 percent. Over a 40-year span, the effect of 4 percent inflation (compounded annually) would force the retiree to spend $52,369 during the first year of retirement to purchase what $10,494.75 would have purchased 40 years earlier. If the retiree withdrew funds at a comparable rate, the “bonanza” would be exhausted in less than five years.
I grow weary hearing about the short-cut ways to fix the Social Security system. Let’s have more definitive ideas and fewer short-sighted “word bites.”
