alright if we follow your advice above and have it invested more conservatively (say, at a 6% rate of return), then regular worker Joe (whose pay increases at 2% a year) can start working at 20 at $25,000, and retire at 65 with a monthly income of $3376.00, or at 70 with $4381.00; both of which are FAR beyond what he could expect from Social (in)Security. low income Joe (whose pay only increases at a rate of 0.5% a year) will never make $33,000 a year; but he can retire at 66 and completely replace his annual income of 31,500, or work until he's 70 and make $41,583.I do like the idea and would support something along these lines. Another change we'll probably need to make is to raise the retirement age a few years. 65 just isn't sustainable now that people live well into their 80s and 90s.
obviously either of these men working until 75 would be fine. L. I. Joe would be bringing home more than 4,700 a month, and M. I. Joe would be bringing in a little over $6K.
make the dang thing even more conservative (5% return, which it should be noted matches the annuity), and it does get trickier. If M. I. Joe retired at 65, he would only be making double the average social security payment. He would have to work until 75 to get an income of $50,000 a year from his account. L. I. Joe doesn't replace his income until 72; and if he retires at 75 he will only recieve $39,000 a year.
which, mind you, is still more than 3x what he would get from Social Security. Even at 65, Joe is still making more with this exceedingly low growth rate than he would under that program.