Study: 99.9% of Americans harmed by Social Security

As Social Security turns 80 years old have you ever stopped to wonder whether you are better or worse off for having government confiscate 12.4% of your wages?
A couple economists at the Federal Reserve asked themselves that question, and found that only four-one-hundredths of one percent (0.04%) of Americans would be better off under Social Security than funding their own private retirement. 99.96% were made worse off.
A few excerpts:
Roughly 0.04 percent (4 of every 10,000) of the current total U.S. population would benefit more from Social Security than from a retirement investment in the S&P 500.
Our evidence suggests that a great majority of current retirees would have had a higher retirement income under private accounts than they do now with the current Social Security system.
A person retiring at age 65 will only benefit more from Social Security relative to a private investment in the S&P 500 if he is a low earner and lives to be at least 96 years old. Finally, for those retiring at age 70, the only individuals that benefit more from Social Security are low earners who live to be at least 94 years old and average earners who live to be at least 108 years old.
Of course that 0.04% who would benefit more from Social Security still bears a considerable risk mentioned, but not quantitatively compensated for, in the study. Bearing that risk in mind we would conclude that fewer than 0.04% (and possibly no one) benefits more from Social Security. That risk is mentioned in the study so I’ll allow the author’s words to speak for themselves:
There is overwhelming evidence that the current Social Security system will become insolvent within the next several decades.
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Tom Liberman September 12, 2015 , 9:31 am
That makes sense to me. Canada’s biggest industry might be oil. The best paying jobs are all in Alberta where the oil is! Oil is an export industry. @rickkelo
Rick Kelo September 12, 2015 , 9:43 am
@tomlib Tom, I’d certainly grant that people would invest in various things and some of those would be choices more risky than I’d invest in myself, but if we’re going to grant that then we have to examine the same question applied in reverse to Social Security:
What does government invest those collected wages in on behalf of the employee?
Nothing. In fact worse than nothing. Not only does government not invest those collected funds so the future retiree earns some return they do the opposite: they spend them with the belief that a future worker’s wages will pay the retirees obligation.
So if we had to compare those two systems and decide which was superior it seems private retirement saving to me…. this is purely normative of course now.
Bud Wood September 12, 2015 , 9:52 am
Social “Security” is the political answer to the inability of people to recognize the need for taking care of themselves and their families. As such, some form of social security could be beneficial in a small community. But it seems to be a boon-doggle in a large country.
Rick Kelo September 12, 2015 , 12:12 pm
@budwood How much of the lack of retirement savings we witness at present do you think is a result of crowding out from SS?