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Old 08-29-2017, 10:12 AM
 
8,281 posts, read 3,454,476 times
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Quote:
Originally Posted by kevinm View Post
All monies paid to the government MUST be used to offset debts of the government. The Federal government has no place to store excess reserves. There is no bank to hold the money.
Excellent! Few people realize this and its implications.

Federal taxes, fines and fees - unless specifically sequestered - simply pay down national debt.

There is no SS locked box. Current SS taxes remitted pay down national debt. New money is created at the time of your monthly SS benefit check as your bank account balance is raised.
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Old 08-29-2017, 10:45 AM
 
Location: Paranoid State
12,682 posts, read 9,425,981 times
Reputation: 14933
Quote:
Originally Posted by BeerGeek40 View Post
Bingo.
That was then.
Now.....the rich also collect it.
Social Security benefits are means tested.

First, let’s look at how benefits are calculated. What most people don’t know is that our FICA dollars don’t all buy the same amount of future benefit. Some of our FICA dollars buy six times as much in benefits as others.

According to the most recent Trustees Report, for instance, the first $767 of “average indexed monthly earnings” (a complex formula that adjusts earnings over time) is credited at a 90 percent rate, assuring the lowest wage workers of a retirement benefit nearly equal to their earned wage.

Wages of more than $767 a month but less than $4,624 a month are credited at a 32 percent rate. This means retirement benefits increase at a much lower rate.

For wages of more than $4,624 a month up to the wage base maximum ($127,200 for 2017), the crediting rate is only 15 percent. Thus, all the wages earned — and employment taxes paid — over that $55,488-a-year “bend point” gain benefits at only one-sixth the rate of the lowest wage earners.

In effect, the Social Security benefits formula functions as a sharply graduated benefits “tax,” reducing the benefits that accrue to higher wages by 85 percent. The higher your means, the lower your benefit.

While workers at low-wage levels can expect Social Security to replace 57.8 percent of earnings at normal retirement age, workers at a “medium” earnings level can expect 42.9 percent and workers at the maximum level can expect only 28.7 percent.

So high-wage workers get half as much for their employment tax payments as low-wage workers — a form of means-testing.

While the original political promise of Social Security was that the benefits would never be subject to taxation, the tax reform of 1983 (during the Reagan administration) initiated taxation of benefits.
A second change during the Clinton administration created another level of tax on benefits. This increased the percentage of benefits subject to taxation from a maximum of 50 percent to 85 percent. In its first year, it was expected to affect only 3 percent of all retirees. The formula for the taxation of Social Security benefits, however, is not indexed to inflation.

A Social Security Administration (SSA) microsimulation model, Modeling Income in the Near Term (MINT), projects that 52 percent of families receiving Social Security benefits paid income tax on their benefits in 2015, and that percentage will continue to increase.

Ultimately, that tax will take back much of the benefits that accrue above the second bend point for higher-income workers. In other words, most of the employment tax paid on wages over about $55,488 a year will bring little benefit to workers because much of it will be taxed away.

The government giveth, and the government taketh away.

When you translate “change the formula for future benefits” from politicalspeak to what will really happen, what you get is yet another way to have workers pay in the same amount of taxes for less in future benefits.
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Old 08-29-2017, 02:17 PM
 
18,246 posts, read 11,653,926 times
Reputation: 11860
Quote:
Originally Posted by SportyandMisty View Post
Social Security benefits are means tested.

First, let’s look at how benefits are calculated. What most people don’t know is that our FICA dollars don’t all buy the same amount of future benefit. Some of our FICA dollars buy six times as much in benefits as others.

According to the most recent Trustees Report, for instance, the first $767 of “average indexed monthly earnings” (a complex formula that adjusts earnings over time) is credited at a 90 percent rate, assuring the lowest wage workers of a retirement benefit nearly equal to their earned wage.

Wages of more than $767 a month but less than $4,624 a month are credited at a 32 percent rate. This means retirement benefits increase at a much lower rate.

For wages of more than $4,624 a month up to the wage base maximum ($127,200 for 2017), the crediting rate is only 15 percent. Thus, all the wages earned — and employment taxes paid — over that $55,488-a-year “bend point” gain benefits at only one-sixth the rate of the lowest wage earners.

In effect, the Social Security benefits formula functions as a sharply graduated benefits “tax,” reducing the benefits that accrue to higher wages by 85 percent. The higher your means, the lower your benefit.

While workers at low-wage levels can expect Social Security to replace 57.8 percent of earnings at normal retirement age, workers at a “medium” earnings level can expect 42.9 percent and workers at the maximum level can expect only 28.7 percent.

So high-wage workers get half as much for their employment tax payments as low-wage workers — a form of means-testing.

While the original political promise of Social Security was that the benefits would never be subject to taxation, the tax reform of 1983 (during the Reagan administration) initiated taxation of benefits.
A second change during the Clinton administration created another level of tax on benefits. This increased the percentage of benefits subject to taxation from a maximum of 50 percent to 85 percent. In its first year, it was expected to affect only 3 percent of all retirees. The formula for the taxation of Social Security benefits, however, is not indexed to inflation.

A Social Security Administration (SSA) microsimulation model, Modeling Income in the Near Term (MINT), projects that 52 percent of families receiving Social Security benefits paid income tax on their benefits in 2015, and that percentage will continue to increase.

Ultimately, that tax will take back much of the benefits that accrue above the second bend point for higher-income workers. In other words, most of the employment tax paid on wages over about $55,488 a year will bring little benefit to workers because much of it will be taxed away.

The government giveth, and the government taketh away.

When you translate “change the formula for future benefits” from politicalspeak to what will really happen, what you get is yet another way to have workers pay in the same amount of taxes for less in future benefits.

Again one already mentioned this upthread.


Social Security is one of the biggest means of "wealth redistribution" of all USA social programs. For reasons outlined above it is always amazes oneself to hear persons going on about the "wealthy" getting SS benefits.


High earning individuals receive far less back on their money than those whose work record is mainly low or even moderate income.
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Old 08-29-2017, 11:36 PM
 
Location: USA
6,171 posts, read 4,950,686 times
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With the elimination of workplace pensions, SS IS going to be the new pension for a lot of people. 401K was never intended to be a main retirement vessel.
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Old 08-30-2017, 01:24 AM
 
18,246 posts, read 11,653,926 times
Reputation: 11860
Quote:
Originally Posted by s1alker View Post
With the elimination of workplace pensions, SS IS going to be the new pension for a lot of people. 401K was never intended to be a main retirement vessel.

No, it wasn't, but then again neither was SS supposed to be a sole source of retirement income.


Americans have been slacking off in savings and investing for years now, and it often shows up at retirement time.


And before anyone starts don't give me that flannel about high college loan debt or whatever that is holding young adults back today. The economy of 1970's or 1980's for that matter wasn't a hayride for many coming out of college, but yet people managed.


It isn't what you earn, but what you save. Even a small percentage socked away each month over time benefits from compounded interest.


Time to start planning retirement is in your 20's or at least by your 30's. Even 40's may not be too late if you have a solid plan. Things like if you don't intend to purchase a home and want to rent all your life, fine; but what assets are you going to have in your "golden years" to fall back upon?
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Old 08-30-2017, 02:33 AM
 
64,577 posts, read 66,100,109 times
Reputation: 43002
i don't mind renting in retirement . we live off all the money we invested that isn't tied up in a house .

how you accumulate the assets and from where is not important . have a plan , invest somewhere ,start early and stick to it is what counts .

in fact where we live renting is a fraction of what buying a home here costs . that is because we rent in a luxury building and homes if you want to own start near a million and run in to the millions .

we are looking in to a co-op next year buy even though it cost 6k a year less than our rent if we don't take a mortgage , we will be giving up 12k in income once the dough is tied up in the apartment . so cash flow will actually be worse .
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Old 08-30-2017, 09:59 AM
 
8,281 posts, read 3,454,476 times
Reputation: 1584
If Medicare went away, folks would have to save for their senior HC. And that would mean many more families would have to go without a home or 401-k investment.
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Old 08-30-2017, 01:39 PM
 
11,315 posts, read 5,839,816 times
Reputation: 20989
Quote:
Originally Posted by s1alker View Post
With the elimination of workplace pensions, SS IS going to be the new pension for a lot of people. 401K was never intended to be a main retirement vessel.
There was supposed to be a "3 legged stool" of pensions, 401(k)/IRA, and Social Security. Corporate America was allowed to kick out one of the 3 legs. People being human, 2/3 of the workforce didn't contribute to IRA/401(k)/403(b) programs. You have the lucky 5% who spent their careers in the public sector with a generous pension. You have maybe 20% of private sector workers who "did it right" and have an OK tax deferred retirement portfolio. Fully 2/3 of people age 55 to 64 are hosed the minute they can no longer work.

I structured my life so my living expenses should be covered just fine with my defer-to-age-70 Social Security check. I'm a career high earner so I'll be getting a COLA-protected $44K per year Social Security check. 401(k)/IRA money is 100% discretionary spending for trips, cars, fancy restaurants, home remodeling, and whatever else I want to blow money on.
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Old 08-30-2017, 01:52 PM
 
11,315 posts, read 5,839,816 times
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Quote:
Originally Posted by Hoonose View Post
If Medicare went away, folks would have to save for their senior HC. And that would mean many more families would have to go without a home or 401-k investment.
Medicare spends $9,900 per person. Where I live, if you want adequate supplemental coverage, you're paying almost $10K in premiums including the little bit you pay to Medicare. You might have 20% of retirees who could actually afford to pay a private insurance version of Medicare. It's expensive which is why it was socialized in the first place. Old people used to starve, freeze, and die from untreated simple medical issues. It's not like you're going to take away the most successful two social programs ever launched in the United States.
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Old 08-30-2017, 02:01 PM
 
Location: Raleigh
8,007 posts, read 5,290,540 times
Reputation: 9647
Quote:
Originally Posted by Hoonose View Post
If Medicare went away, folks would have to save for their senior HC. And that would mean many more families would have to go without a home or 401-k investment.
If the projection of $250,000 a piece for people who survive past 65 is correct, (as I saw recently) that is practically impossible.
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