Dallas center's Web site doesn't tell the whole story, critics say
WASHINGTON - Proponents of privatizing Social Security promise that retirees would get higher returns if they put their money in financial markets.
Now you can do the math - with a little help.
A Dallas research group that supports privatization has constructed an online calculator that compares Social Security benefits with those of a fully privatized retirement system.
The calculator created by the National Center for Policy Analysis can be found at www.mysocialsecurity.org.
"This calculator is far and away the most sophisticated and accurate calculator that is available," said John Goodman, president of the center, at a Washington news conference Monday.
But the calculator has its critics.
For instance, it assumes workers would have the option of pouring all the Social Security taxes they have ever paid into a private plan.
And experts who oppose privatization contend administrative and management costs would eat up much of the private returns, costs they argued are not fully included in the center's calculator.
"They make the assumption that you could include all the payroll taxes that you ever paid into Social Security," said Kilolo Kijakazi, a policy analyst at the Center on Budget and Policy Priorities, a Washington research and advocacy group for low- and middle-income workers.
Even so, the calculator dramatizes the difference between the 2.1 percent return projected for Social Security and the 4.8 percent projected for a portfolio of stocks and bonds.
Users can put in their age, salary, gender and occupation and the calculator figures out their monthly retirement payments under Social Security and a private system.
The calculator constructs projections from 750,000 workers contained in 15 years of U.S. Census data.
Here are examples for two 35-year-old workers who would retire at age 67:
A waitress earning $25,000 could expect monthly income from Social Security of $1,148 compared with $4,397 from a stock and bond investment program.
A male construction worker earning $35,000 would receive a monthly Social Security check of $1,417, compared with $7,044 from a private investment plan.
Mr. Goodman said the calculator was constructed to show how workers would fare if they could enter a privatized system when they joined the workforce at age 18.
It is designed to help underscore the benefits proponents see in a fully privatized system.
The Dallas group is not the first to design a Social Security calculator.
The Social Security Administration has one at its Web site at www.ssa.gov. And the Libertarian Cato Institute also has one on its Web site at www.cato.org.
Privatizing some or all of Social Security is seen as one option for dealing with the projected insolvency of the retirement system.
Other proposals call for cutting benefits and raising taxes.