I'm Pete du Pont with the National Center for Policy Analysis. A couple of weeks ago I introduced the new NCPA social security calculator, which can tell you what your retirement nest egg would be with a partially market system. A recent NCPA brief analysis shows another reason why it leaves you with more money: compound interest.
Savings set aside for retirement earn interest both on the amounts contributed and on the interest or earnings reinvested. a young worker investing $800 a year in an account earning eight percent contributes $34,000 — but retires at 67 with $284,000.
Try that with current social security.
Investment retirement accounts are portrayed as a risky scheme, but guess who already has this: Federal employees, including members of Congress, some of whom vote against your opportunity to do the same. The return for the Federal plan for the fiscal year ending September 30th — 13.9 percent. Social security for the same period — three percent.
So market accounts are too dangerous — for whom?
Those are my ideas, and the NCPA we know ideas can change the world. I'm Pete du Pont. Next time, the declaration of independence loses in New Jersey.