Per Diem , Dont fall for the scam

Discussion in 'Experienced Truckers' Advice' started by smokey12, Jul 4, 2019.

  1. Accidental Trucker

    Accidental Trucker Road Train Member

    Jun 4, 2015
    it’s a simple math question. So, for grins and giggles, let’s do it again.

    first, social security is not just an old age pension, it’s also disability insurance and life insurance. So, if you opt out of SS, you should replace it with retirement investments, life insurance and disability insurance to compare apples to apples. And that muddies the water some, because you may not need life insurance dips you don’t have kids at home and don’t support a spouse. Still need disability insurance during your working life, of course.

    First thing to recognize is that Social security is half paid by the employee, and half by the employer (round numbers). So you automatically lose the 7,5% of the employer’s contribution. Of course that is easily offset by the 12-28% you will save on income taxes (Fed, State and local). Let’s assume for discussion that the balance of the loss of the employer contribution and the gain in income tax is a net of plus 5% of the portion of your income claimed as per diem.

    The math then becomes; 15% put into SSI, vs 20% you personally manage for retirement, life insurance and disability insurance. Let pretend you put 15 of the 20% into retirement investments and the other 5% into term life and disability insurance policies.

    Let’s assume:

    * the “per diem” portion of your check is $10K per year.
    * the SSI return is O% per year (which is actually generous)
    * your investment return is 10% per year (slightly below the average of the stock market for the last 100 years).

    If you start at age 30, at age 65, after 35 years of contributing an additional $1,500 per year to SSI, your payout will be an average of $52,500.

    If you invest it into retirement yourself and get average stock market returns for the same 35 years, at age 65 you will have $475,000.

    That’s the math. Of course, if you take option “C”, and take the money and blow it on a new Harley and rounds at the local watering hole, or eve golf equipment, then paying your taxes to the government is the better choice.
    Bean Jr. Thanks this.
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  3. RockinChair

    RockinChair Road Train Member

    Yes. If you invest that money wisely it will net you a much greater return than SS will.

    Edit: @Accidental Trucker just pointed out.
    Bean Jr. Thanks this.
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