SS Maximum contribution

[ChiliPepr]

Every year since 1988.

 

[athena53]

Not only did I not earn enough, but sometimes my jobs didn't even participate in social security or gave me the option of not participating (so I didn't).

Just curious- what types of jobs were they? Heck, they even withheld SS from my first official paycheck- for a week of delivering phone directories. I know clergy can opt out.

I paid the max for probably the last 30 years of my 38-year career. I once calculated the value of my contributions (not including employer's) accumulated at 6%, and the money was enough to buy an annuity that would pay 125% of what SS will pay. So, counting the employer contribution and accumulated return, I'd be able to buy an annuity for 2.5 times what SS will pay, both starting at age 70. That's not perfect, of course- SS includes COLA and spouse/survivor benefits, but it still shows there's a whole lotta income redistribution goin' on.

 

[NW-Bound]

Federal employees did not [-]have to contribute[/-] participate in SS until Reagan overhauled the FERS (Federal Employee Retirement System).

And to this day, some state employees still pay no SS, and have their own funding.

 

[cathy63]

Just curious- what types of jobs were they? Heck, they even withheld SS from my first official paycheck- for a week of delivering phone directories. I know clergy can opt out.

For me, my two years of $0 contributions were when I worked for the University of California while I was a student at UCSB. We were considered state employees, so we didn't participate in SS, but we also weren't eligible for CalPERS since we were less than full-time.

 

[Hermit]

About half my counted 30 years.

 

[Rustward]

32 total years employment..
30 years paying into SS.
Hit the maximum 26 of those 30. The last of those 30 ended in March, so didn't even come close.
First 2 years had a DB pension so did not pay into SS.
Three of those 30 I was a self-employed sole proprietor.

Not counted at all, a $0.75 per hour job in high school that actually paid into SS and is on my record.

 

[W2R]

Just curious- what types of jobs were they?

Federal employees did not [-]have to contribute[/-] participate in SS until Reagan overhauled the FERS (Federal Employee Retirement System).

And to this day, some state employees still pay no SS, and have their own funding.

Thanks, NW-Bound. I was multitasking and missed athena53's question. Yes, your answer is correct and applies in my case.

 

[pjigar]

All but first two years of my employment.

 

[Clone]

Interesting to play with the numbers. During the 35 years at megacorp, I maxed out 19 times. But one of the years I missed it was only by several hundred dollars. I hit at least 90% of the maximum 30 of the 35 years.

Another way of looking at it- for those 35 years, I paid in 97% of the maximum.

 

[Oleanmike]

Luckily I hit it every one of my 35 working years.

 

[scrabbler1]

I never did but I got pretty close during my last years of working full time in 1999 and 2000, getting only a few thousand dollars short. Once I reduced my weekly hours worked for the first time in 2001, I would never be close again.

 

[Texas Proud]

Luckily I hit it every one of my 35 working years.

WOW... that means you came out the gate making good money...

 

[Hyperborea]

I'd say that just about every fresh grad who gets a job in tech in Silicon Valley is hitting the social security cap.

 

[brucethebroker]

5 times 1995-1999 then twice again 2012 & 2013.

+1 to the 5 years in early 90's. A group of four or five of my middle mgr. friends & I would celebrate when we hit it-nice increase for the remaining months.

In reading the responses posted here, it is interesting how many people DID NOT, or rarely made the top limit during their working years. More proof of the "not how much you make, but how much you save/invest" and LBYM arguments.

 

[eytonxav]

I was lucky to have a well paying career, so it happened in many of my working years, and the most enjoyable of which would occur half way through the year. DW was also a SAHW and I am very greatful that I was in position to help her do that.

 

[SomedaySoon]

32 total years full time work paying SS.
Hit the maximum 26 of those 32.


I only hit the max during the early years when I was young with a SAHM because when she stopped working, I started working two jobs and did consulting on the side to keep total family income high enough to pay the mortgage.....Still, I am looking forward to nice size SS check at 70 if things work out.

 

[braumeister]

It's a good system from my perspective. Even though I only hit the max threshold five times in the first decade of my career and never even close after that, when I started taking SS I got around 80% of the max benefit.

 

[whatnot]

I have 40 years of history, starting at the age of 16. The 1st 10 years my earnings were rather sparse. I worked part time through college and then part time when I had my 2 kids. But I have hit the max the last 12 years and will hit it in 2017 which will be my final full year of employment.

 

[NW-Bound]

It's a good system from my perspective. Even though I only hit the max threshold five times in the first decade of my career and never even close after that, when I started taking SS I got around 80% of the max benefit.

It will not look that good if you compare it with what you would get from other non-SS pension systems, whose benefits are more proportional to the contributions.

SS has a welfare component to subsidize for low wage earners. Everybody should contribute to this, and non-SS pensions should not be exempt. Reagan did the right thing to change the FERS.

After learning about the Australian pension, I like it a lot. Their SS system separates out what is an individual unalienable benefit, like a 401k that a person takes from job to job, and what is the support for people with low income. The latter is means tested, and more generous than our SSI.

Another thing I like about the Australian pension is that if the economy goes bad, all retirees take a pay cut. Nobody gets a guarantee of a juicy pension if the country goes down the tube. They are all in it together.

 

[Pilot2013]

I won't go back and check, but I am guessing the last 6-7 years I have hit the limit toward the last 4, maybe 5 months of the year. I will now still hit it, but maybe just for a month or two (depending on Bonus $$'s).

I am all for raising the limit, or having a donut hole approach that starts it back up at say, $250k or something if that keeps the system from changing while they look at getting it back in control (fraud, waste, using it for what was not intended, etc).

Like it or not, it is a part of my retirement plan...

 

[nash031]

Never. Haven't even broken six figures yet. A good portion of our gross isn't FICA taxable income. May never make the second bend point at this rate!

 

[Big_Hitter]

my dad was a career max earner - he retired in 1992 (at age 64) and is still getting SS

I think he got a really good return on his contributions.

 

[karen1972]

At age 44, this will be the first year as an adult I don't have reported earned income. I have 29 years of reported income of which 16 I maxed out. Total (my employer and me) have paid in $225K already to the system. I don't expect I'll get a good return on that.

 

[athena53]

At age 44, this will be the first year as an adult I don't have reported earned income. I have 29 years of reported income of which 16 I maxed out. Total (my employer and me) have paid in $225K already to the system. I don't expect I'll get a good return on that.

It will probably depend on whether or not you have other sources of income and where your average wage falls in the formula. As NW Bound noted, there's a "welfare component" that gets re-distributed to lower-income folks, who get more than a fair return on their contributions. Under the current formula, your benefit is 90% of the first $856 of the average indexed monthly earnings, plus 32% of the next $5,157, plus 15% of the remainder. You can see that lower-income people get a proportionately higher benefit. If you have other sources of income, such as pensions or investments, your SS can be taxed, too.

 

[bada bing]

I have 42 years of earnings and 32 years of those are max'ed. I plan to work another 3 years (retire at 61), if I can stand it, which will bring me to 35 years max'ed (a max'ed max). Just a coincidence I'll make 35 years SS max though, the payback calculation is so regressive it in no way is an incentive to work for SS benefits. I paid max SS contributions on 10 years I was 100% self employed, which is a double insult.

It will not look that good if you compare it with what you would get from other non-SS pension systems, whose benefits are more proportional to the contributions.

SS has a welfare component to subsidize for low wage earners. Everybody should contribute to this, and non-SS pensions should not be exempt. Reagan did the right thing to change the FERS.

After learning about the Australian pension, I like it a lot. Their SS system separates out what is an individual unalienable benefit, like a 401k that a person takes from job to job, and what is the support for people with low income. The latter is means tested, and more generous than our SSI.

Another thing I like about the Australian pension is that if the economy goes bad, all retirees take a pay cut. Nobody gets a guarantee of a juicy pension if the country goes down the tube. They are all in it together.

I have read up on the Aussie system, and it seems so vastly superior to the USA SS system it is almost unreal. I like everything about it, the discreet & transparent separation of compassionate support, the visible investment of everybody in the country in the financial success of their markets and the portability of the benefit you earn for yourself.

Just the influence on the national psyche by having everyone visibly invested must be a huge political benefit quite apart from the fiduciary aspects of the plan.

If our politicians would ever demonstrate the cajones to really "fix" our broken SS system, they couldn't do much better than adopt the Aussie plan.