deltaneutral83 wrote:I'll turn that $260 from savings on FICA taxes into much more than I lose in SSI benefits in 30/35/40 years, right? Or at least it's a risk I'm more than comfortable taking. If I'm going wrong somewhere, please advise.
The reason to compare things at the same risk level is that you can change your risk level freely. If you pay the $260 in FICA taxes, you can still move $260 from a bond fund to a stock fund, getting the same risk (and expected return) increase as if you avoided the FICA tax and put $260 in a stock fund.
The break-even, as noted on the wiki, is 214 months if you are over the second bend point and your low-risk investments match inflation. Young investors can invest in long-term TIPS, which yield about 1% above inflation with no risk, so if you aren't maxing out your IRA/401(k), and are above the second bend point, it is probably better to avoid the taxes. But below the second bend point, the break-even is 100 months, and even adjusting that to 150 if your cumulative returns are 50% above inflation makes it worthwhile paying the FICA.
There is an exception if the current year will not be one of your 35 highest-earning years, or if you will have spouses or widow(er)'s benefits for most of your SS earning period. Conversely, if you have a lower-earning spouse who is likely to outlive you (and thus your benefit will last longer than your life), paying more FICA is even more desirable.