[Jodavaho.io] — Josh Vander Hook

The model. Everything is computed in constant 2026 dollars. Your salary grows only by the "real raises" rate; investment returns are real returns. Each working year, the chosen percentage of your salary (up to the 2026 taxable maximum of $184,500) is contributed. Social Security's benefit is computed by the actual statutory formula: average your highest 35 years of covered earnings (AIME), then apply the 2026 bend points (90% of the first $1,286/month, 32% up to $7,749, 15% above that) and adjust for your claiming age (about -30% at 62, +24% at 70, relative to the full retirement age of 67). Because Social Security indexes past wages, bend points, and the taxable maximum to wage growth, holding them all fixed in real terms is a reasonable simplification.

Payouts. The strategies differ only during the working years. At retirement, every balance converts into the same dumb-careful instrument: a guaranteed level real payout priced at the bond rate, exhausting exactly at your planning age. In other words, you buy a TIPS ladder with the whole nest egg. No strategy holds risky assets in retirement. The drawdown chart instead keeps the balance in bonds and withdraws the same check Social Security would pay, to show what's left over (or when the money runs out). Social Security's "value at retirement" is the present value of its benefit stream at the bond rate.

TL;DR table. Lifetime payout divided by lifetime contributions, undiscounted, in today's dollars. Every strategy converts to the guaranteed bond payout at retirement and exhausts exactly at your planning age, so every column plays by Social Security's rules: nothing left to heirs. Time value of money is ignored here; the implied return column and chart below are the discounted view. The investment columns barely vary with salary (only through the taxable cap). Social Security's column varies because the formula is progressive.

Implied real return. The last chart solves for the real rate of return at which your contribution stream exactly pays for your benefit stream (an internal rate of return), swept across salaries under your current settings. The dot marks your inputs. The bend points make the implied return fall as salary rises. For the investment strategies, the lines are the lifetime rate implied by accumulating at the strategy's return and paying out at the bond rate, so they sit below the working years return.

Benefits are not proportional to pay-in. The dashed line on the first chart is the present value, at each age, of the benefit you've earned so far. It is concave, not linear: the formula replaces your first dollars of average earnings at 90% and your last at 15%, and only your top 35 years count. With a flat real salary, every year you work past 35 costs the full tax and earns nothing extra.

What this ignores, in Social Security's favor or against:

• Longevity insurance. Social Security pays until you die, not until your planning age. If you live to 100, the comparison shifts in its favor. Raise the planning age to see by how much.
• Disability and survivor insurance. About 1.8 points of the 12.4% fund disability insurance, and survivors of deceased workers get benefits. Use the 10.6% option to compare retirement-for-retirement, or price separate term life + disability policies yourself.
• Spousal benefits. A non-working spouse adds up to 50% on top of your benefit. Single-earner couples do better under Social Security than this model shows.
• Market risk. The portfolios assume their average return arrives smoothly, every year, during the working years. It won't. The payout is guaranteed once converted at retirement, but the nest egg you arrive with is in reality a wide distribution around the smooth curve shown.
• Taxes. Contributions are compared pre-tax (like a traditional 401k); benefit taxation and RMDs are ignored on both sides.
• Political risk. The trust fund selector models the two ends of current law. "Scheduled" assumes Congress closes the funding gap without touching benefits. "Payable" applies what payroll taxes alone can cover, year by calendar year: 100% before the projected 2032 depletion, 77% at depletion, declining roughly linearly to about 67% by 2100 (per the 2025 and 2026 trustees reports). Your career is assumed to start in 2026, so the share applied to each retirement check depends on the calendar years you would actually be retired. The table and bars show the average check, and the implied return calculation uses the full declining stream. An actual fix will land somewhere between the two, and could also arrive as higher taxes or a higher cap instead of benefit cuts.

The transfer switch. An optional progressive layer for the account world: workers earning above $45,000 (roughly the median covered wage) divert the chosen number of points of their covered wages into the accounts of workers earning below it, as a flat yearly credit. The calibration is hard coded in the source: about $11T of covered payroll, 185 million covered workers, and about 85% of payroll earned above the cutoff, so each point transferred funds a credit of roughly $1,000 per year per low wage worker. Your cost never changes; the full contribution is still taken, it just lands in someone else's account. Unlike the bend points, the transfer happens up front where you can see it, and it compounds in the recipient's own account. Watch the strategy curves kink at $45k on the implied return chart. It does not apply to the phase-out chart below.

The phase-out chart. Starting in 2027, the Social Security contribution falls by one point per year (zero by 2039). Each freed point goes half to guaranteed bonds, half to the 60/40 portfolio, into an account you own. Benefits already earned are honored in full, paid from general revenue in proportion to what you actually contributed, so nobody who paid in gets stiffed. Retirement income becomes your accrued benefit plus your accounts, annuitized at the bond rate like everything else on this page. The comparison lines are doing nothing (payable benefits under current law) and raising taxes to pay scheduled benefits in full. Two modeling choices worth knowing: accrued benefits are pro-rated by contributions, which shortchanges the plan a little (the 90% band means a computation on a frozen earnings record would credit mid-career workers somewhat more), and paying accruals from general revenue is an assumption about policy, not current law. The cost is real: payroll revenue diverted to the accounts reaches roughly $1.4T/yr by 2039, and winding down legacy benefits runs on the order of twice the $25T gap that already exists. In exchange, every cohort retires on more, and everyone after the transition gets the full multiples in the TL;DR table.

Sources: SSA 2026 COLA fact sheet (taxable maximum, tax rates), SSA benefit formula bend points, SSA benefit computation, Trustees report summary.