Social security part 2

Social security withholds 6.2% of your salary and this is matched by your employer. Of this amount 2.2% is used to cover the cost of disability and survivor benefits leaving the remaining 4% to invest. If a 25 year old person earning $40,000 per year invested this 4% plus the 4% from his employer in a private plan he could do better than social security. Federal employees have had a savings plan since 1984 called the TSP that has five savings options including mutual funds and bond funds. The stock market over the past 120 years has averaged 10% annual return. If the 25 year old earning $40,000 got a 3% annual raise and invested 8% of his salary at 10% he would have $2.7 million by age 62. Investing this at 2% would give him the equivalent of what his social security benefit would be and upon his death his family would receive the $2.7 million.