The government sticks it to upper middle class recipients of Social Security. A lot of them do not know how badly they are being cheated.
An article in this month’s Fortune describes it. The author is a self-employed writer.
He says that the spring report from the trustees of the Social Security Trust Fund will report that the fund’s position is deteriorating faster than expected.
He thinks there will be political calls to adopt means-testing for the rich. He then adds: “But here’s a dirty little secret: Social Security is already seriously means-tested. And my situation shows it.”
He and his wife pay separately.
After we finish paying two separate federal taxes that will be credited to the Social Security trust fund, our net benefit will be only about a third of what we and our employers have paid into Social Security over more than 50 years. That strikes me as some pretty serious means-testing. And keeping the current system with its uncontroversial means-testing is a lot less divisive than trying to eliminate benefits for “the rich,” however you define them.
Now, let me show you the numbers for my wife and me. Our benefits are worth only 75% of what we and our employers have put into Social Security since I drew my first paycheck in 1961, plus the interest earned on that money. I know this because in 2009 I asked Social Security’s actuaries to calculate that ratio to help me write a Social Security story.
So, they took a 25% loss. I call that cheating. He doesn’t.
They will get taxed at a 35% rate on retirement income. They have other income.
Because I have other retirement income, my wife and I will pay tax on 85% of our Social Security. That tax is at a 35% rate — because of the alternative minimum tax, not because I’m in the top bracket — so we’re paying the IRS almost 30% of our benefit. It goes to the Social Security trust fund.
In addition, I pay Social Security tax because I’m still employed. Fortune and I will pay a total of $11,450 this year, about 25% of my benefit. This, too, goes into the Social Security trust fund, and will increase my benefits only slightly. (I’m assuming, as analysts do, that the employer’s piece of Social Security is in effect paid by employees.)
Add it all up, and the net benefit that my wife and I get is only about 35% of the value we paid in. Even if I retired and stopped paying Social Security tax, we’d get only slightly more than half of what we put in.
He thinks that’s OK. I call it cheating.
But he worries that the law will be changed to define him out of the pool. He will still pay, but will get nothing.
I call that cheating, too.
For more details, click the link.
what about retired military that paid into social security at the full rate and draw significantly less than the full retirement check … all monies being theirs …….. not the government's …..
…and the Social Security issue is the "third rail" of politics. Why? Becuase the pols do not want Americans to become too aware of the dire straits the fund is actually in, and the uselessness of the system to most of us. End "Socialized" Security. Stop stealing our hard earned money. Let me save it myself for God's sake!
The Social Security trust fund, National Highway trust fund, Aviation trust fund, every government trust fund has been robbed with no accountability or responsibility by anyone in government.
Yep, my dad retired from the USAF as a Col. He never got any of his SS contribution……….not one check. He had his AF retirement and that was it.
Then there are the welfare addicted who bad mouth those like my dad and sit on their lazy bums waiting for the check to arrive in the mail and their food stamp credit card to be refilled. People like my dad made it possible for those lazy bums to have what they have taken all their lives. The welfare addicted I mentioned does NOT include those who have lost their jobs due to obama and his regulations!!
The government is now trying to say Social Security is an "entitlement", forgetting that the trust funds have been built up over generations with payroll deductions through FICA withholding. SS was running a surplus until Clinton and the GOP Congress under Newt stole the reserves to "balance the budget". To all Baby Boomers: that was your retirement fund that got wiped out.
Every thing the government touches is a rip off….so what else is new? Surely you did not really think that money would still be yours did you? Some body has to pay for all those government perks that they exempt them selves for paying for.
It's my understanding that the SS fund was raped a long time before this. It was just sitting there ripe for the picking by a congress that needed extra money to waste…but…their retirement fund at the time remained untouched!
You are correct.I believe it was Lyndon Johnson who took the money and put it into the general fund.
I paid into SS while in the army, then paid into it for three years while a "temp" employee for the Air Force inder Civil Service auspices prior to gaining full Civil Service status. I worked for 34 years and retired. Went to work for a contractor, paid into SS for about 8 yers befor retiring again under SS. When I applied for SS, I was told that there was a law that allowed me to collect only half of what I should have gotten. So that is another rip off by our great leaders in Washington DC. This applies to ALL Civil Service retirees, if they paid the required 40 quarters.