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## Internet Forwards Can Be Wrong

Note: You can use any financial calculator to do this problem, but if you want the BEST, you can get our 10bii Financial Calculator for iOS, Android, Mac, and Windows!
Image Source, with subsequent modification by me
THE SCENARIO One of my relatives recently posted a (to be polite) 'opinion piece' about Social Security and how it's outrageous that it's now being called a Federal Benefit Payment (which has been the case since it started, in case you're curious) and with other dubious (i.e. incorrect) statements included to make a political point. It did, however, lay out a very clear and simple statement that we can check using a financial calculator, namely:
If you averaged \$30K per year over your working life, that's close to \$180,000 invested in Social Security. If you calculate the future value of your monthly investment in social security (\$375/month, including both you and your employers contributions) at a meager 1% interest rate compounded monthly, after 40 years of working you'd have more than \$1.3+ million dollars saved.
They hadn't gotten much right in the post up to that point, so I thought 'hey, why not double-check them in case they're off by a few bucks'. Let's do that now. The question: If you averaged \$30,000 per year over your working life, and if your Social Security contributions had averaged 15% of your income over that time (they haven't), and if you'd taken that money (instead of giving it to the Social Security Administration) and instead invested it at 1% annualized return, compounded monthly), how much would you have at the end of 40 years? Assume monthly contributions.
THE SOLUTION This one is entirely straightforward. The only thing we don't know is the monthly contribution, and that's easy enough to figure out. \$30,000 x 15% = \$4,500. \$4,500 ÷ 12 = \$375 per month contribution. Hey! The post got a thing right! Good job, little buddy! First things first, make sure the calculator is using 12 Payments per Year. N: 480 (40 years is 40 x 12 = 480 months) I/YR: 1 (We're assuming a 1% return on our investment) PV: 0 (When we start, we don't have anything) PMT: -375 (We contribute \$375 per month) FV: (This is what I'm trying to find)

Unsurprisingly, in a post filled with bad information, the final answer of \$1.3 million was off by about \$1.1 million. The correct number is \$221,209.30. In other words, it's super-duper wrong, by over a million dollars, meaning that it's off by over 80%.

But hey, what's a million bucks between friends (or random people on the internet who don't check the math)? As you can tell, error-filled posts annoy me, particularly when they serve to weaponize outrage of people under false pretenses (I've seen this posted by an aunt and an uncle, both of whom are at or near retirement age).

Have you encountered any brazenly wrong and easy-to-check nonsense in a forwarded post? If so, what was it? If not, how in the world did you manage that? Let us know in the comments!