How Social Security Rips of the Average American

The Johns Hopkins News-Letter (Johns Hopkins U.) ^ | 1/3/3 | Aaron Back

[mombonn]

Still, it would be nice to have the option to put a small portion of your FICA tax into investments of your own choice.

If I were 25, I'd KILL to put a portion of my FICA tax into investments of my own choice.

That's the answer - do some hypotheticals as to what those accounts would be worth vs the monthly benefit SS would offer. The BIG difference being that the monies would BELONG to either the investor, or his beneficiary.

[oldcomputerguy]

Finally someone with a brain on this thread.

The current and future problems with SS are simply demographic in nature. The Boomers have affected all institutions as they passed thru life and SS will be no exception.

The explaination I saw on the problem was given by one who had studied it for years for Congress. He indicated that the worst facing SS in the next 20-30 years is a reduction in benefits, maybe 25% or so without any changes to the system. That is a far cry from SS going "bankrupt" as the fear mongers are want to profess.

The personal accounts issue is designed to bridge that gap but has the real issue of people mismanaging the money involved. At least however they would have a sum of money to pass on to their heirs, an entirely new concept for poor people.

I will retire in a few years and while I have saved as much as I can, SS will be a part of my retirement income, and I am damn glad I have it. It is the difference between retiring in a few years or much later.

[poet]

"So what if you took that money and invested it in Treasury Bonds, which are fully guaranteed by the Federal Government, and make an average return of about six percent a year. You would be vastly richer upon retirement"

In view of the fact that they can't handle SS monies received in the first instance, what makes the writer so confident that Treasury Bonds are a valid guarantee?

And the beat goes on.

BTW, SS recipients recieved a 1.4% increase this year and 2.6% last year, so why the whining? After all, our "conservative" republican controlled has gave themselves a $4,900 increase in 2002 and the senate did the same for 2003, all, I might add, at the midnight hour so as to avoid publicity.

We should all be thankful for the little "crumbs" we receive and for the "crumbs" who give us our bread.

FReegards

[AdamSelene235]

People in the USA have forgotten how to save, and if, as an example they allowed folks to swing with the market, most will not have food or rent money at age 65.

There is little point in saving money when the money is being debased to allow the Feds to evade their debts.

[AdamSelene235]

People in the USA have forgotten how to save, and if, as an example they allowed folks to swing with the market, most will not have food or rent money at age 65.

There is little point in saving money when the money is being debased to allow the Feds to evade their debts.

[CDHart]

Actually, the FICA deduction doesn't stop in 2003 until you hit $87,000 gross.

Carolyn

[MEGoody]

"Graduate the tax by whatever scheme suits your fancy, topping out at 30%."

This would not be fair unless the payouts were also graduated.

[Intolerant in NJ]

Then you pay much less since FICA does not apply to incomes over $72,600.
This is such a misleading statement, it's ridiculous....of course, the benefits paid are also capped after a certain amount - so it's not as though people stop paying at the limit, but continue to receive higher and higher paybacks.....

[gridlock]

This would not be fair unless the payouts were also graduated.

Screw fair.

Get past the notion that it is your money that you are putting into Social Security.

It is this notion that makes rational policy on Social Security impossible and makes the impending train-wreck inevitable.

Eventually Social Security will morph into a system that guarantees retirement security to the indigent. This will be all that we can afford, once the demographic shifts kick in. Tax policy should reflect this fact, and dedicated funding for Social Security must end.

[kabar]

Question
What is the Social Security contribution rate for 2003?

Answer
The 2003 contribution rate, also known as FICA tax, for employees and for self-employed people are:
(For comparison, 2001 and 2002 rates are also shown.)

2001 2002 2003
Employee 7.65% 7.65% 7.65%
Self-Employed 15.30% 15.30% 15.30%


Maximum Earnings Taxable: 2001 2002 2003
Social Security (OASDI only) $80,400 $84,900 $87,000
Maximum Tax Withheld $4,984.80 $5,263.80 $5394
Medicare (HI only) No Limit No Limit No Limit

NOTE: The 7.65% rate is the combined rate for Social Security and Medicare. The Social Security portion (OASDI) is 6.2% on earnings up to the applicable maximum taxable amount (see below). The Medicare portion (HI) is 1.45% on all earnings

The taxable caps go up and up faster than inflation. There is no cap on Medicare.

[DannyTN]

Effectively I agree with you.

Social Security should be split into forced personal savings accounts to insure funds upon retirement.
The cost for indigent care should be split out and called a tax.

Eventually, the government could roll out investment options, but you don't want to create a situation where people are investing for higher returns and taking the risk of losing it all and ending up on the public doll. Thus you would probably want to keep at least 60% in US treasury bonds.

Any politician that refers to a "lockbox" should be hung from the gallows.

[ThinkDifferent]

I will retire in a few years and while I have saved as much as I can, SS will be a part of my retirement income, and I am damn glad I have it.

You shouldn't be. You will either receive more or less from SS than you paid in FICA taxes. In the latter case you've been ripped off, in the former case you are receiving funds that have been stolen from later generations.