Doug said:
Thanks. I wish I'd had the details behind his assertion that today's workers will get a negative return from their SS taxes. I suspect they use preposterously high real interest rates to deflate the value of future benefits, which is what Kotlikoff did with his fraudulent generational accounting (6% real rate to figure the present value of a government benefit with no default risk). But since I didn't know the details I couldn't challenge him on it.
Me: You might check out C. Eugene Steuerle and Jon Bakija, _Retooling Social Security for the 21st Century_. I don't recall the details well enough to explain them, but they work out the math treating SS taxes as "investments", then measuring the IRR based on averaged returns for five categories of recipients, as I recall.
For the highest earners -- wife and husband, both high earners, the IRR is negative slightly. I think Steuerle claims that as time progresses, the negative IRR gets worse, and more high earners, not just the double-income couple, will suffer a negative IRR.
None of us in soc.retirement are capable of checking the assertion, so it would be very good of you to do so. I suspect that Steuerle's computations are reasonable.
So far, in arguments I handle the issue as insurance. The IRR on auto insurance is surely negative, but that does not vitiate the need for it. I mean, the idea of somebody arguing against auto insurance because its IRR is negative, is for giggles.
-- Homines id quod volunt credunt.