Compounding it annually gives $85,356.78; compounding it monthly gives $743,501,062,122.57 for just the FIRST months investment. However, no compounding is required to show $7X40X4X0.04=/=$48: It is $44.80, maybe not simple enough for a caveman, but simple enough to do in my head (I did check it by hand to be sure.) Feel free to explain how you arrived at either $48/month or 4% of $48/month for 50 years being $1.25 million, because I frankly cannot find any way to get there, and have tried quite a few for the second number. When I was in school they made us show our work, as I have; you are welcome and encouraged to follow suit.

Regardless, I do not know how you can suggest ANY American earning $14,500/year can afford investing a dime at any rate. Using some for insurance against old age poverty is necessary (though between the standard deduction, EIC and other credits they are likely to get that back) but investment out of the question.

I will wait for the others until tomorrow (my time) since I am getting drowsy, but do look forward to hearing the "insurers assume other peoples risk, they TOTALLY do not pay each claimant SOLELY with money from the others."

EDIT: By the way, the reason I was unsure whether to compound interest (though I did try it both ways) was because you said, "If you make $7.00 an hour, working 40 hours a week, 52 weeks a year, that comes out to be $14,560 a year. If you invest 4%, that comes out to $48.00 a month." So you need to state either 1) the percent invested or 2) the rate of return, because one of those numbers is missing. Also, you should state whether the investment compounds interest monthly or annually, because either is possible; theoretically it could compound at any rate, but no one familiar with the old chessboard problem offers interest compounded daily.