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Old 01-15-2015, 07:37 AM
 
Location: Los Angeles area
14,018 posts, read 17,735,102 times
Reputation: 32304

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Quote:
Originally Posted by nicet4 View Post
Like you I have paid in a lot over my lifetime and in fact did a detailed analysis a couple years ago and determined that if the amount sent in on my behalf had been deposited into the most basic bank passbook savings account paying the average passbook interest rate of the time my social security account would today have a worth exceeding $750k.

That from the simplest savings method and if my money had been put into a Vanguard account it would be worth several million.

I believe all social secutity should be exempt from all federal and state taxes regardless of other income.
Your analysis of the ultimate worth of your Social Security payroll contributions misses the fact that they provided you with INSURANCE along the way: insurance for your children in case you died early, insurance for you in case you became disabled, benefits for your spouse even if she never worked a day in her life. All that costs money. And like all insurance, claiming that you didn't get any payments does not prove it was of no worth. For example, most of us do not have our houses burn down, but I don't think we begrudge paying those premiums over the years.

And why do you believe all SS should be exempt from all federal and state taxes regardless of other income? (By the way, you already have your wish about the state taxes in most states; even Calif., a high tax state, does not tax SS). What is it about the concept of income tax you don't understand? SS is income, and 15% of it is already exempt from taxation. The breaks on the remaining 85% are designed to give the poor a respite. Why should those breaks be extended to people who don't need them?
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Old 01-15-2015, 07:44 AM
 
8,195 posts, read 11,911,100 times
Reputation: 17974
Quote:
Originally Posted by escort rider View Post
your analysis of the ultimate worth of your social security payroll contributions misses the fact that they provided you with insurance along the way: Insurance for your children in case you died early, insurance for you in case you became disabled, benefits for your spouse even if she never worked a day in her life. All that costs money. And like all insurance, claiming that you didn't get any payments does not prove it was of no worth. For example, most of us do not have our houses burn down, but i don't think we begrudge paying those premiums over the years.
qft
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Old 01-15-2015, 08:33 AM
 
Location: Baltimore, MD
3,745 posts, read 4,216,823 times
Reputation: 6866
Quote:
Originally Posted by jrkliny View Post
Whoa there!!! Over my working lifetime I have paid enough taxes to blow up a bunch of terrorist camps and villages. I have paid piles of social security and Medicare deductions. Now that I am no longer working and am collecting my meager benefits you think they should be taxed???<snip>
Yes.
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Old 01-15-2015, 09:14 AM
 
Location: Grove City, Ohio
10,133 posts, read 12,383,606 times
Reputation: 13956
Quote:
Originally Posted by Escort Rider View Post
Your analysis of the ultimate worth of your Social Security payroll contributions misses the fact that they provided you with INSURANCE along the way: insurance for your children in case you died early, insurance for you in case you became disabled, benefits for your spouse even if she never worked a day in her life. All that costs money. And like all insurance, claiming that you didn't get any payments does not prove it was of no worth. For example, most of us do not have our houses burn down, but I don't think we begrudge paying those premiums over the years.
I am well aware of the insurance benefits, as I explained in this thread back in October, and a previous time a few years before that.

Quote:
The big issue for me is already passed and that's disability and survivors benefits.

Looking at one of my older statements if I had been disabled my monthly disability payment would have been just under $2,000/month. On top of this my children and wife would have been entitlted to benefits as well.

Even bigger is survivor benefits.

What happened if I had died in an auto accident when I was 34 with a young wife and children at home?

Yeah, I had life insurance that I seem to remember was half a million which was a lot of money in 1981 but not that much today. Half a million is not that much to support a wife with two growing children that have 10 years before high school graduation and then college. Even back then you'd burn though half a million so fast it would make your eyes spin.
Speaking as a far right wing republican social security is among the best things our federal government has ever done for us and I mean that.

Disability insurance. Try to purchase a policy that will pay you 50% of your current earnings, up to a certain amount indexed to inflation, for the rest of your life when you are 30 years old. You can't find it and if by chance it was available (it isn't) you couldn't afford the premium payments.

As traditional pensions continue to go away I am all for strengthening social security and allowing some options.

For example what if there was a window every 10 years where you could opt to pay a little more and reach "full retirement age" a little earlier? What if you could opt to pay more and eventually receive more?

Someone who works masonry on construction jobs for example. It is work that isn't for 67 year old men so what if they allowed Joe to opt paying an additional percentage, say 3% more, allowing him to buy down his FRA over time? An extra 3% over 30 years and Joe can have FRA benefits at age 62 instead of 67? If Joe decided to work to age 67 instead of $2,200 he'll receive $2,800 because he paid the extra 3% over the years?

Quote:
And why do you believe all SS should be exempt from all federal and state taxes regardless of other income? (By the way, you already have your wish about the state taxes in most states; even Calif., a high tax state, does not tax SS). What is it about the concept of income tax you don't understand? SS is income, and 15% of it is already exempt from taxation. The breaks on the remaining 85% are designed to give the poor a respite. Why should those breaks be extended to people who don't need them?
Because, as old age insurance is called, social security is an insurance policy and not earned income.

http://www.ssa.gov/oact/progdata/describeoasi.html

Quote:
The Old-Age and Survivors Insurance Trust Fund is a separate account in the United States Treasury. A fixed proportion (dependent on the allocation of tax rates by trust fund) of the taxes received under the Federal Insurance Contributions Act and the Self-Employment Contributions Act are deposited in the fund to the extent that such taxes are not needed immediately to pay expenses. Taxes are deposited in the fund on every business day.
If you suffer a fender bender on your car do you have to pay income tax on the money received from the insurance company?

Why should someone poor receive more breaks than someone who is richer? I worked 70 hour weeks for 50 years and because I have more money for retirement than Joe who worked 30 hours a week part time somehow giving him breaks I don't get is deemed "fair"?

I personally dislike government picking winners and losers based on some bureaucrats idea of "fairness".
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Old 01-15-2015, 01:29 PM
 
Location: SoCal desert
8,093 posts, read 13,231,206 times
Reputation: 14870
Quote:
Originally Posted by Escort Rider View Post
And why do you believe all SS should be exempt from all federal and state taxes regardless of other income?
I'm not nicet4, but I'll chime in.

It wasn't taxed by the Feds for a long time.
The only reason SS is taxed now is because the government wanted more tax revenue.

From SS web page:
"Since a pair of 1938 Treasury Department Tax Rulings, and another in 1941, Social Security benefits have been explicitly excluded from federal income taxation. (A revision was issued in 1970, but it made no changes in the existing policy.) This changed for the first time with the passage of the 1983 Amendments to the Social Security Act. Beginning in 1984, a portion of Social Security benefits have been subject to federal income taxes."
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Old 01-15-2015, 01:34 PM
 
Location: SW Florida
9,751 posts, read 7,033,290 times
Reputation: 14260
Quote:
Originally Posted by TuborgP View Post
Great points and I wonder how many with maximum SS income don't have a pension and or decent investment income. A couple with dual Max SS income was pulling over 200k working income a year retiring in the last decade or so. It is all relative to average salaries and family in any given geographic area and what the forum participant is use to. We have had multiple forum income polls showing a considerable number of participants with higher incomes than discussions would suggest.
I don't know, this site might help answer some questions:


https://turbotax.intuit.com/tax-tool.../INF14328.html
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Old 01-15-2015, 06:54 PM
 
Location: Forests of Maine
30,680 posts, read 49,443,611 times
Reputation: 19129
Quote:
Originally Posted by goingstrong View Post
Easy to use calculator makes projections easier. I ran several what if's and was somewhat surprised at the results.

How much of my social security benefit may be taxed? | Calculators by CalcXML
According to that calculator zero of my SS will be taxed.
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Old 01-15-2015, 07:07 PM
 
Location: Wisconsin
21,538 posts, read 44,002,416 times
Reputation: 15135
Quote:
Originally Posted by Submariner View Post
According to that calculator zero of my SS will be taxed.
Well, you/wife don't have enough income to put you over the threshold.

For married couples w/$50-60k SS and another $40-$50k pensions (not to mention RMDs) which many here have, yes, virtually all of their SS will be taxed.
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Old 01-15-2015, 07:10 PM
 
Location: Forests of Maine
30,680 posts, read 49,443,611 times
Reputation: 19129
Quote:
Originally Posted by Ariadne22 View Post
Well, you/wife don't have enough income to put you over the threshold.

For married couples w/$50-60k SS and another $40-$50k pensions (not to mention RMDs) which many here have, yes, virtually all of their SS will be taxed.
I am on pension now, I do not pay Income tax. I have not paid Income taxes for many years.
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Old 01-15-2015, 07:28 PM
 
Location: Wisconsin
21,538 posts, read 44,002,416 times
Reputation: 15135
Quote:
Originally Posted by Submariner View Post
I am on pension now, I do not pay Income tax. I have not paid Income taxes for many years.
Well, even with the pension income you could have part of your SS subject to tax on page 1 of the 1040 (I do) - but with standard deductions/exemptions, possible other writeoffs, any potential net tax (including on SS) could be zeroed out. This happens to me most years. Some part of SS is subject to tax, Schedule E and itemized deductions, zero out the tax liability.
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