Oh, and that 401(k) thing? Forget about it, Social Security is better. Sorry about that!
I know nothing at all about financial planning, and maybe somebody who does can read this article and make sense of it, but this paragraph from US News (!!) caught my eye:
James Mahaney is vice president of strategic initiatives for Prudential Financial and an expert on Social Security. As Mahaney explains in an updated Prudential whitepaper, "Innovative Strategies to Help Maximize Social Security Benefits," "No other vehicle can match the combination of inflation-fighting increases, longevity protection, investment risk elimination, and spousal coverage that Social Security can--potentially making it one of the most valuable sources of retirement income."
Social Security income is so valuable, he says, that people should strongly consider drawing down their private retirement-fund balances if doing so will permit them to delay taking Social Security and boost these benefits. The reason for this counter-intuitive advice is that Social Security payments may qualify for much, much lower effective income-tax rates than income provided by liquidating holdings in private retirement accounts.
Tax-advantaged private retirement accounts let people build up nest eggs without having to pay taxes on either the contributions or earnings within the accounts. However, when it comes time to sell off account investments to produce needed income for retirement, that income is nearly always taxed as ordinary income. That means it is taxed at the recipient's highest marginal tax rate.
The essential dishonesty of all advocates of privatizing social insurance for retirement can be seen in this:
They never, never advocate for letting people increase the amount of deferred compensation they will take in the form of increased Social Security taxes.
That's because it's all about the rents! And the salaries, and the bonuses, and the commissions, and the looting, and the extraction...