Except that every Senior should be paid more than they put in.
If you are only paid what you put in, then you have received no return on your investment. The minimum amount that should be paid is the Present Worth of an annuity for all the years you paid in for the inflation rate over that period.
For example, if a person collecting social security put in $500 for the year in 1975, and we have averaged 5% inflation over the past 40 years since he put that money in, that %500 in 1975 dollars is worth $3,500.
It would be hard for me to calculate the annuity because inflation pushed pay up over the 40 years and you earn a lot more as you get promotions and raises, so the most recent contribution would be much much higher for the last year, but of course that may only be compounded over say 10 years if the retiree collecting SS today retired in 2005.
The point is, you can’t just add up the contributions and then say anything the retiree collects over that he hasn’t paid in. That is not true. You have to calculate the present worth of the time value of that money he put in over his 30 year career. It is going to be a LOT more than the face value put in. It could be 3 or 4 times face value depending on the inflation rate experienced.
People who started putting money in in 1975 were experiencing a 10 ar 15% inflation rate back then. That is not insignificant.
But just saying “You put in $125,000 and you are collecting way more” isn’t true. You have to calculate the present value of those contributions by the inflation rates they incurred.
There is no investment. Money paid is a ttax. A tax is not an investment and produces no return
Another aspect - SS is highly socialized, with higher earners subsidizing lower earners.
Looking at the 3 tiers of the SS calculations that use a retiree’s AIME, or average indexed monthly earnings: In the first tier, 90% of your AIME count toward your PIA (primary insurance amount). Those in this tier alone get back more than they paid in, by far.
The 2nd tier drops rather quickly, giving a retiree credit for only 32% of what they earned. Some in this category might get back what they paid in, some won’t. Depends where they are in the earnings range and how long they collect SS.
Those earning in the last tier will never come close to getting their money back, not even just the amount they paid in if not self-employed, much less the total paid in for them by an employer and themselves.
All calculations are indexed for COLAs.
My husband is 50 and wanted to ‘max out’ his SS before retiring. I doubted that paying in more would actually be a good thing, given our increasingly fascist government. So I did the calculations for his situation. If he works until 67, he’ll pay in over $152,000. (I counted his Medicare portion too, because he will get nothing more in Medicare benefits for paying in more since it is 100% socialized.) This $152k is only my hubby’s portion - add his employer’s and it’s over $300,000!
If he lives to the average male lifespan of 83 and starts collecting at 67, he’ll get $40,000 more than if he quits today and doesn’t pay in one more dime.
It is nothing more than a ponzi scheme depending on the hardworking dupes to keep supporting it.
So, hubby quit work and we are going Galt. It is freedom!
And when socialized security is cut it will be the top tier that is reduced in the calculations. I recommend everyone quit paying into it, and quit supporting the fascist beast, as soon as they can.