U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Retirement
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Reply Start New Thread
 
Old 03-21-2015, 08:06 PM
 
Location: Los Angeles area
14,018 posts, read 17,729,443 times
Reputation: 32304

Advertisements

Quote:
Originally Posted by CSRSJim View Post
Although CSRS 7% payroll deduction and the Social Security 6.2% payroll deduction are not the exact same thing,
it is money that gets taken out of my pay just like SS is taken out of other's pay. I do agree the benefit (pension) of CSRS is better than SS, but the "tax" is about the same. And CSRS pension is taxed more than SS payments in retirement.

Many low income or long lived people draw a lot more SS benefit payments in retirement then they paid into the system. It is the higher income people paying into SS that get a worse percent benefit payments in retirement. But both systems are similar in that payroll deductions are used to pay benefits in retirement. It is not the same as a 401k, since those are voluntary and CSRS withholding and SS withholding are forced payments. They are either both "taxes" or they are both not. It is just the structure of the systems that is different, in fact SS is called insurance but the benefit is adjusted in a crazy way so it is better than normal insurance for low income and worse than insurance for high income.
Disagree with the bolded. In his post, ManMad enumerated the differences between the two, and you have simply ignored his points. Neither one is voluntary; that is the similarity, but there are significant differences.

The retirement deduction is a forced savings payment whereby you retain control and ownership of the exact amount, whereas the Social Security is a tax because it covers (for example) payments to minor children in the event of the wage earner's early death, and you are taxed the same whether you have any minor children or not, and whether you ever have any or not. In other words, your SS taxes go into a pool which is for the benefit of a broad group of people, whereas your retirement contribution will benefit only you and/or your designated beneficiary(ies), not someone else's minor children.

If I had written my original post before I retired from full-time work, I would not have included my deduction of 8% of salary for the California State Teachers' Retirement System as part of my taxes. Although I had no choice in the matter, it remained MY money in the sense that upon retirement, or upon quitting public school teaching in California before retirement eligibility age, one of my options was to take the entire amount (plus accumulated interest on it) as a lump sum. I think that would have been a dumb choice because it would mean giving up the employer's contributions, but that is not the point here.
Reply With Quote Quick reply to this message

 
Old 03-22-2015, 04:42 AM
 
Location: Maryland
282 posts, read 305,808 times
Reputation: 338
Quote:
Originally Posted by Escort Rider View Post
The retirement deduction is a forced savings payment whereby you retain control and ownership of the exact amount, whereas the Social Security is a tax because it covers (for example) payments to minor children in the event of the wage earner's early death, and you are taxed the same whether you have any minor children or not, and whether you ever have any or not. In other words, your SS taxes go into a pool which is for the benefit of a broad group of people, whereas your retirement contribution will benefit only you and/or your designated beneficiary(ies), not someone else's minor children.
You are plain wrong. They are both systems that pay into a pool for the benefit of everyone in the pool. They just have a different structure. The Civil Service Pension pool pays similar (but different) benefits to all dependants in the pool just like SS. It is a different bookkeeping pot of money. Both don't really exisit, they are responsibilities of the federal govt. States do similar things with teachers and state workers that don't pay into SS and don't collect any SS benefits.

BTW, any new hire of the federal govt after 1983 is part of the FERS system (not CSRS) and they pay into Social Security like private company workers and collect SS benefits. I am one of the last pure CSRS employees (1983). I guess the discussion of public pension systems (state, county, federal) that don't pay into SS and don't collect benefits is the subject of a different topic. Back to taxes.

Last edited by CSRSJim; 03-22-2015 at 04:47 AM.. Reason: Taxes
Reply With Quote Quick reply to this message
 
Old 03-22-2015, 07:27 AM
 
8,191 posts, read 11,908,623 times
Reputation: 17964
Quote:
Originally Posted by CSRSJim View Post
Back to taxes.
Yes, back to taxes....of which your CSRS deduction doesn't qualify in any sense of the word. Just because it is deducted from your pay, that doesn't make it a tax.

Here, let me give you an example that should help to disabuse you of your mistaken notion: If you worked for a private sector employer and your company had a traditional defined benefit pension program that required you to pay 7% of your salary into their retirement fund, would you call that a tax?

Of course not.

Your entire argument rests on the fact that your employer is a government entity rather than a private sector employer, but there is no substantive difference between you paying into the Civil Service Retirement Fund and a private sector employee paying into Widget Manufacturing Inc. Retirement Fund.
Reply With Quote Quick reply to this message
 
Old 03-22-2015, 10:57 AM
 
Location: Central Massachusetts
4,800 posts, read 4,844,519 times
Reputation: 6377
Quote:
Originally Posted by CSRSJim View Post
You are plain wrong. They are both systems that pay into a pool for the benefit of everyone in the pool. They just have a different structure. The Civil Service Pension pool pays similar (but different) benefits to all dependants in the pool just like SS. It is a different bookkeeping pot of money. Both don't really exisit, they are responsibilities of the federal govt. States do similar things with teachers and state workers that don't pay into SS and don't collect any SS benefits.

BTW, any new hire of the federal govt after 1983 is part of the FERS system (not CSRS) and they pay into Social Security like private company workers and collect SS benefits. I am one of the last pure CSRS employees (1983). I guess the discussion of public pension systems (state, county, federal) that don't pay into SS and don't collect benefits is the subject of a different topic. Back to taxes.
Even newer federal govt workers are in a new FERS system and instead of the .8% taken from pay (not tax), new employees have 3% taken from their pay. This is above and beyond the TSP matching.

I believe they have a greater payout down the line but.... it does come at a higher cost to the employee.

Quote:
Originally Posted by MadManofBethesda View Post
Yes, back to taxes....of which your CSRS deduction doesn't qualify in any sense of the word. Just because it is deducted from your pay, that doesn't make it a tax.

Here, let me give you an example that should help to disabuse you of your mistaken notion: If you worked for a private sector employer and your company had a traditional defined benefit pension program that required you to pay 7% of your salary into their retirement fund, would you call that a tax?

Of course not.

Your entire argument rests on the fact that your employer is a government entity rather than a private sector employer, but there is no substantive difference between you paying into the Civil Service Retirement Fund and a private sector employee paying into Widget Manufacturing Inc. Retirement Fund.

You have explained that perfectly correct. It is no different the federal government still has to contribute to that fund. If not then they would be breaking the law and it is not a tax.
Reply With Quote Quick reply to this message
 
Old 03-23-2015, 05:08 PM
 
7,907 posts, read 5,031,079 times
Reputation: 13564
Quote:
Originally Posted by CSRSJim View Post
Many low income or long lived people draw a lot more SS benefit payments in retirement then they paid into the system. It is the higher income people paying into SS that get a worse percent benefit payments in retirement.
This is the insidious (but unavoidable) nature of most tax systems. The mythical ultra-top earners may benefit from favorable tax-treatment, but comparatively high earners will almost certainly pay into the system more than they'll obtain in benefits. Likewise with single filers. For the very poor and the very rich, single vs. married filing-status makes little difference. For the upper middle class, it makes a huge difference.

Quote:
Originally Posted by CSRSJim View Post
...BTW, any new hire of the federal govt after 1983 is part of the FERS system (not CSRS) and they pay into Social Security like private company workers and collect SS benefits. ...
FERS has a defined-benefit pension component, akin to that of CSRS; it just happens to be (for most workers) only about 50% as valuable as CSRS.

The great advantage of most defined-benefit pension schemes is for workers who start early in life, and choose to retire early. In the US federal government, the age at which full-retirement becomes possible is 55-57, depending on birth cohort. With Social Security, it's 65-67. Phrased somewhat crudely, SS is a reward for staying in the workforce until one becomes quite old. Defined-benefit pensions, on the other hand, are a reward for entering the workforce while still very young.

Pensions are akin to Social Security taxes, in that some employees will keel over soon after retirement, obtaining a strongly negative return on their contributions. Others will live for decades, receiving a splendid deal, made possible by the contributions of others. But I disagree with CSRS Jim in considering pensions to be taxes, precisely for the reason that another poster mentioned: pension contributions can be withdrawn upon separation from government service, as a lump-sum. SS contributions can not.
Reply With Quote Quick reply to this message
 
Old 03-26-2015, 12:57 AM
 
26,589 posts, read 52,277,138 times
Reputation: 20410
Quote:
Originally Posted by M3 Mitch View Post
Correct me if I'm wrong, but I think your property tax being low is related to the fact that you bought your property a long time ago - Proposition (whatever # it is) limiting and nearly freezing your property taxes.

12 acres with a ~1000 ft sq house, couple of garages, few sheds here in WA costs me about $2K per year property tax.

Have not done income tax yet (I take it to a CPA firm). But I can tell you my WA income tax was $0, since we don't have an income tax.

Good topic for a thread, ER.
Hey Mitch... how did you find a place in WA with such low property tax?

Mine is over 13k and due soon...

It jumped 80% about 18 months after I bought when Prop I-747 was struck down... also dashed my retirement plans with taxes over 1000 a month.

No Income Tax doesn't help at the moment since California taxes that...

WA prop I-747 was meant to add some predictability to Washington taxes... California has Prop 13 which limits the annual increase at 2% plus voter approved measures and that only takes 55% for some school issues...
Reply With Quote Quick reply to this message
 
Old 03-26-2015, 07:57 PM
 
Location: Eastern Washington
14,228 posts, read 44,895,263 times
Reputation: 12803
Quote:
Originally Posted by Ultrarunner View Post
Hey Mitch... how did you find a place in WA with such low property tax?

Mine is over 13k and due soon...

It jumped 80% about 18 months after I bought when Prop I-747 was struck down... also dashed my retirement plans with taxes over 1000 a month.

No Income Tax doesn't help at the moment since California taxes that...

WA prop I-747 was meant to add some predictability to Washington taxes... California has Prop 13 which limits the annual increase at 2% plus voter approved measures and that only takes 55% for some school issues...
Our place is out in the country between Yakima and Tri-Cities. I think you are in Cali, where essentially all taxes and costs are high.

In town no doubt the property taxes would be higher.
Reply With Quote Quick reply to this message
 
Old 03-26-2015, 08:25 PM
 
Location: Los Angeles area
14,018 posts, read 17,729,443 times
Reputation: 32304
Quote:
Originally Posted by M3 Mitch View Post
Our place is out in the country between Yakima and Tri-Cities. I think you are in Cali, where essentially all taxes and costs are high.
Cost of living is driven more by housing costs than by any other factor. So no, "all" taxes and costs are not high in California. A poster who lives in a more rural area of California (I believe it's Mr5150 - if not you sir, please forgive my aging memory) has pointed out more than once in his posts that California is not limited to the San Francisco Bay Area, the Los Angeles area, and the San Diego area. True, most of the state's population lives in those three areas, but once you get out of them, housing costs become dramatically more affordable. (And with lower purchase costs of houses come lower property taxes).
Reply With Quote Quick reply to this message
 
Old 03-26-2015, 09:23 PM
 
26,589 posts, read 52,277,138 times
Reputation: 20410
Quote:
Originally Posted by M3 Mitch View Post
Our place is out in the country between Yakima and Tri-Cities. I think you are in Cali, where essentially all taxes and costs are high.

In town no doubt the property taxes would be higher.
Both in the SF Bay Area of California and in Olympia Washington and Thurston County is the highest by far...
Reply With Quote Quick reply to this message
 
Old 03-28-2015, 11:03 AM
 
29,774 posts, read 34,860,277 times
Reputation: 11687
Quote:
Originally Posted by Escort Rider View Post
Cost of living is driven more by housing costs than by any other factor. So no, "all" taxes and costs are not high in California. A poster who lives in a more rural area of California (I believe it's Mr5150 - if not you sir, please forgive my aging memory) has pointed out more than once in his posts that California is not limited to the San Francisco Bay Area, the Los Angeles area, and the San Diego area. True, most of the state's population lives in those three areas, but once you get out of them, housing costs become dramatically more affordable. (And with lower purchase costs of houses come lower property taxes).
Badddddddddddddddddddda Bing! When we were researching transplanting and living cost I noted that the tax rate per $1,000 assessed value was higher where we ended up in NC than San Diego. However the cost of housing difference made the actual taxes way lower. Wait hold on the property tax rate where we came from was just a tad higher but the housing valuations muchhhhhh higher thus a much lower tax rate in NC.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Retirement
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top