Paying for the "payroll tax" cut

[ERD50]

I actually like the simplicity of the [-]social security[/-], I mean payroll tax. We have a program to provide some income help to older people. We pay for it through this tax. It applies to all Americans and people working legally in the countery. Very nice. ...

This makes a lot of since to me for its intended purpose: providing a safe minimum of survival and care in a civilized society. ...

I also feel we should have a safety net for people. However, I disagree that SS makes sense in this regard. SS strikes me as a very odd and convoluted safety net.

For example, why should someone who earned a higher career income, get a higher payout? They should (on average) have less need for a safety net. Just seems backwards to me.

-ERD50

 

[ziggy29]

For example, why should someone who earned a higher career income, get a higher payout? They should (on average) have less need for a safety net. Just seems backwards to me.

Part of it. I think, is that SS wasn't designed as a welfare program or a major wealth redistribution tool. It wasn't designed *specifically* as a safety net though it is surely that for folks with lower incomes and not a lot of personal savings.

 

[ERD50]

Part of it. I think, is that SS wasn't designed as a welfare program or a major wealth redistribution tool. It wasn't designed *specifically* as a safety net though it is surely that for folks with lower incomes and not a lot of personal savings.

Agreed, and I think that is part of what makes SS discussions tough. People should agree on what it is (or should be) before we can intelligently discuss changes to it, and I'm not sure what it is (or what people want it to be).

-ERD50

 

[tightasadrum]

Good point, although I'm glad to get it, when I decide to start it. By then, they may have a different plan of disbursement. Means testing will likely be the method selected. I'm prepared.

 

[seraphim]

.I also feel we should have a safety net for people. However, I disagree that SS makes sense in this regard. SS strikes me as a very odd and convoluted safety net.

SSI is not convoluted - it's a very straight forward system designed to provide participants about 40% of their income upon retirement. It is not designed to support people, but to 'assist'. Unfortunately, Many participants have come to see the system as something which is supposed to support them. That is not what it is designed to do. Last time I researched it, about 27% of people who will receive benefits have no other source of income upon retirement. (the following figures are as best as I can remember): 56% have less than $25k saved, and somewhere aroun 75% have less than $100k saved. 93% percent of the work force will receive some benefit, no matter how minimal. Again, my numbers may be a bit off, but are close. Middle age memory ( researched it last year for a discussion.)

SSI was designed to FORCE workers to save, because they were not doing so. It was not designed to share the wealth, or balance out inequities in earnings. It was designed to be self sufficient, supported only by participants.

The safety net comes in the form of disability, Medicaid, and other social programs targeted for lower incomes. Medicare for the elderly, etc.

*those figures came from the SSI website
** I meant SS above, not SSI. Thanks for the correction.

 

[seraphim]

. For example, why should someone who earned a higher career income, get a higher payout? They should (on average) have less need for a safety net. Just seems backwards to me.

Because they paid more INTO the system. It's like any other pension plan. It's not a welfare program.

 

[rescueme]

SSI was designed to FORCE workers to save, because they were not doing so. It was not designed to share the wealth, or balance out inequities in earnings. It was designed to be self sufficient, supported only by participants.

SSI is not SS (nor SSD):

Understanding Supplemental Security Income (SSI)-- SSI Overview

Just trying to keep the terms correct ...

 

[justplainbll]

With all the alphabet soup it's easy to understand how Speraphim called it SSi instead of OASI.

 

[donheff]

SSI is not SS (nor SSD):

Understanding Supplemental Security Income (SSI)-- SSI Overview

Just trying to keep the terms correct ...

Thanks for the link, I never realized that FICA doesn't support SSI.

 

[seraphim]

I stand corrected lol. I thought SSI stood for something else.

I don't participate in SS, and normally don't pay it much attention. The payroll tax reduction affects me not at all.

I'm a bit bothered, though, that so many people who DO participate don't seem to understand how it works.

 

[Midpack]

I'm a bit bothered, though, that so many people who DO participate don't seem to understand how it works.

You mean voters? We probably couldn't have extreme liberals and extreme conservatives any other way...and we seem to have more of both as the years go by.

 

[MichaelB]

I stand corrected lol. I thought SSI stood for something else.

I don't participate in SS, and normally don't pay it much attention. The payroll tax reduction affects me not at all.

I'm a bit bothered, though, that so many people who DO participate don't seem to understand how it works.

When you say you do not participate, do you mean you don't pay into SS or you are not collecting yet?

 

[seraphim]

. When you say you do not participate, do you mean you don't pay into SS or you are not collecting yet?

I don't pay into SS, and - according to their info sheets they send out - I will qualify for a bit due to work I did in HS, college, and a job I had prior to entering government service.

There is one aspect I am still confused about in my case: I may fall into a non-contributing category. I've been unable to get it clarified.

But the amount SS says I'll get is very minimal. Not really a factor in my budgeting.

DW is a teacher. She does not contribute, and SS says she does not qualify for benefits.

 

[seraphim]

. You mean voters? We probably couldn't have extreme liberals and extreme conservatives any other way...and we seem to have more of both as the years go by.

I mean workers. A friend of mine assumed he was going to receive about $3000 a month, because someone else he knew received that much. He ended up only getting half as much. An unpleasant surprise.

There have been discussions on other forums, and the amount of incorrect information being generated is surprising, which is why I did some checking on my own.

 

[Alan]

I mean workers. A friend of mine assumed he was going to receive about $3000 a month, because someone else he knew received that much. He ended up only getting half as much. An unpleasant surprise.

There have been discussions on other forums, and the amount of incorrect information being generated is surprising, which is why I did some checking on my own.

It is surprising that your friend did not have an idea of what SS he was likely to receive as, apart from a couple of recent years, the SSA has been sending out annual statements to every indivudual that not only lists their salary history but also gives estimates of their benefits.

 

[seraphim]

It is surprising that your friend did not have an idea of what SS he was likely to receive as, apart from a couple of recent years, the SSA has been sending out annual statements to every indivudual that not only lists their salary history but also gives estimates of their benefits.

I know. Don't ask me. I know what he told me a year and a half ago, when he talked about selling his business, and what he told me last week. I know I'm extremely cynical, but lot of people don't pay attention to what's in front of them - including a statement from the SSA.

 

[Midpack]

I mean workers. A friend of mine assumed he was going to receive about $3000 a month, because someone else he knew received that much. He ended up only getting half as much. An unpleasant surprise.

There have been discussions on other forums, and the amount of incorrect information being generated is surprising, which is why I did some checking on my own.

I meant that those same people who don't understand how Soc Sec works even though they're beneficiaries, are also voters, a scary thought?...sorry.

 

[growing_older]

I'm a bit bothered, though, that so many people who DO participate don't seem to understand how it works.

There's a lot of alphabet soup and some of it seems deliberately intended to cause confusion. As for how it works, you mean how it worked when I first enrolled? or now? or when I'm likely to get any benefits? or at any point with all the rule changes in between?

How it works is simple: I pay the amount they require through payroll deduction, so I never see that money and have no control over the amount taken. When I'm old enough I will have some choices about when to receive benefits (if any) and none of it is guaranteed, so I take my chances if I plan on it. It's more complicated if I'm self-employed.

 

[seraphim]

As for how it works, you mean how it worked when I first enrolled? or now?

Have you found there to be a difference?

 

[Chuckanut]

IA friend of mine assumed he was going to receive about $3000 a month, because someone else he knew received that much.

Assume - Ass U Me - When you assume something you make an Ass out of U and Me.

 

[Chuckanut]

DW is a teacher. She does not contribute, and SS says she does not qualify for benefits.

I believe those days are long gone for most of us. I have been a teacher and I always paid SS, just like anybody else earning a dollar. I think, at some earlier time, some government entities could opt out of SS if they provided their own pension plan. Today, other than those grandfathered in, I do not believe that is possible.

 

[ERD50]

I believe those days are long gone for most of us. I have been a teacher and I always paid SS, just like anybody else earning a dollar. ...

This apparently varies by State, so you have to be careful with broad-brush statements. I was pretty sure that teachers in IL do not pay into, nor receive benefits for SS. As I am just now double checking DDs taxes for her (she is a first year teacher here in IL), I looked again at her W2, and she most definitely does not pay into SS.

-ERD50

 

[growing_older]

Have you found there to be a difference?

Was this a serious question? Social Security has been tinkering with the percentages withheld frequently. FICA & SECA Tax Rates As well as adjusting the wage base on which it is levied annually. FICA & SECA Tax Rates As for the retirement dates, those also have been adjusted from a standard for everyone, to an age based standard depending on when you were born. Retirement benefits by year of birth Not to mention numerous rule changes such as the file and withdraw Retirement Planner: If You Change Your Mind They have changed the rules for taxation of benefits and are talking seriously about adding additional means testing. Yes, you can plan on the contribution of Social Security benefits in your retirement plans, but they better be flexible plans, because the social security rule and benefit changes show no signs of stabilizing or becoming any more reliable than they have been in the past. Currently under serious consideration: adjusting ages again, increasing wage base, modifying benefit calculations, changing tax treatment, adding unspecified means testing.

 

[seraphim]

. I meant that those same people who don't understand how Soc Sec works even though they're beneficiaries, are also voters, a scary thought?...sorry.

Ok - now I understand lol. I missed the implied tone...

 

[seraphim]

. Was this a serious question

Yes. I haven't followed the nuances and changes, as it really doesn't affect me. I'm interested in your observations.