Comment: Yes they do. This can be proven using an HP 10B

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In reply to comment: What about all the interest (see in situ)

Yes they do. This can be proven using an HP 10B

calculator, and believe me I have done this calculation more times than I care to count.

for example if someone averaged $23000 over 30 years and had 7.6% taken out for soc. sec. each year and 2.65% for Medicare each year (and they didn't because rates were lower then as were salaries) and don't laugh at the $23000 for 30 years.....you can check and see how much salaries have inflated....

then in 30 years they paid in $2364 a year. Using 10.1% for an interest rate (ok you can use whatever rate you want, but I have to pick a number for now) that means putting away $2364 at 10% for 30 years =
$458,757. At 5% it is $164,638. Problem

--is inflation.
---longer life expectancies than the system was set up for
---funding people who have never paid into the system...eg people who are relatives of new immigrants or people who never were able to work due to disability

Look---I didn't make this stuff up. I just work in financial services. This stuff is written up all over the place. Don't take my word for it. I'm no genius...but it's everywhere.
Plug in your own numbers at:
http://www.bankrate.com/calculators/savings/compound-savings...

SequoiaTrees4RonPaul