Retire in your 30s and Get Subsidized Healthcare? I don't get it.

[braumeister]

SS is a tax.

No, it is a plan.

Perhaps you should let Congress and the IRS know of their mistake. They seem to think it's a tax.

 

[scrabbler1]

Here is an interesting exercise.

A. Go to opensocialsecurity.com and plug in your information as if you were a single and using the advanced options checkbox, set the discount rate to zero. Then at the bottom, set the month/year for an alternative claiming strategy to your FRA and click on submit. The result is the undiscounted expected value of your retirement benefits if you claim at your FRA (the sumproduct for each year of your scheduled benefits times the probability that you will be alive to collect them using the selected mortality table).

B. Now go to your SSA statement and take the sum of the amounts that you and your employer paid into SS in the middle of page 3 and multiply that result by 85% (the 15% difference assumes that 15% paid relates to survivor and DI coverage).

C. Divide A by B. What do you get? I get 2.32 meaning that on an expected value basis that I am getting 2.32 times what both my employer and I paid in.... if I do the same calculation for just what I paid in I get 5.59 times.

FWIW, a couple years ago I did a year by year calculation to solve for the accretion rate where my and my employer contributions grew sufficient to buy a COLAed life annuity commensurate with my SS retirement benefit at my FRA (but using 80% rather than 85%) and the "rate of return" was about 6.5%.

I would dispute the 85% figure you showed in Item B. Survivor and DI payouts are 28% of the total, not 15%.

https://www.ssa.gov/OACT/TR/2018/tr2018.pdf

On page 43 (Table III.A5), the total payments for 2017 is 941,461. Payments to retired workers and auxiliaries are 680,233. That's 72%, of the total. [It happens to be 85% of payments to retired workers+survivors only, not including DI in the denominator).
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[limeyx]

How much of your SS funds will get paid back to you, is an on-going topic on many forums.

How long do you plan to live?

I could be totally wrong but I thought effectively we never get "our" money back?

People paying now are essentially paying for current retirees (+/- the trust fund) and thats why we better have kids and make sure they go out to work because they will eventually pay for ours

 

[NW-Bound]

Perhaps you should let Congress and the IRS know of their mistake. They seem to think it's a tax.

When SS was initially introduced, there were many groups that lobbied for exclusion. State employees, and federal employees were initially excluded. Some religious groups such as the Amish objected, saying they took care of themselves and needed no government help. The Amish were also excluded, and still are.

The people that were excluded such as the state employees had their own pension plans, and they could do better or worse than SS depending on how the plans were managed. The Amish true to their words take care of themselves and never contributed nor used SS or Medicare. They do still have to pay federal and state income taxes.

In 1984, under the Reagan administration the law was changed regarding federal employees, and they were "signed up" for SS, whether an individual wanted it or not.

So, unless you belong to the originally excluded groups, SS is a tax to you. You do not have the choice to opt out of it, the same as not being able to "opt out" of various taxes, such as federal and state income taxes, real-estate and vehicle taxes, sales taxes, etc...

And when you pay taxes, you can petition and request some services, but nothing is ever guaranteed. The government will decide to fix the roads according to their priority, deploy policemen as they see fit. They do not guarantee that your road will get repaved every so many years, or you have so many policemen per city block. SS is just the same way. They give you money according to criteria set by Congress, and that changes as they see fit.

And the above was affirmed by the US Supreme Court in 1960, in the case that I cited. It was ruled that SS was not a contract, and there was no guarantee.

How many changes in SS benefits have we seen over the years? There will be more changes, and they will always be in the direction of giving out less. There's just not enough money coming in, compared to the outflow.

 

[Texas Proud]

I am going through radiation treatments for my cancer. My oncologist went on a rant the other day, about how many patients they get who are in the USA for medical tourism. They do not pay anything for this cancer center treatments, but the law mandates that they are treated. So their costs are lumped in with all the rest of us paying patients. We pay more so the cancer center can afford to treat the tourists coming here from Canada.

But everyone in the US seems to just love the Canadian healthcare system with it's long waiting lines [which is the reason behind all of these tourists coming down into the US].

Can you find any article on this... I just do not believe that there is a law mandating that they do cancer treatment for non-citizens.... now, if they had an accident and needed emergency treatment then yes they will get it... but cancer treatment is not an emergency...




Edit to add... I see it has been discussed, but the answer given did not meet the test of being correct... so I still would like to read something that showed this medical tourist where they pay nothing...

 

[marko]

My comment was very few people if any get back the exact amount they paid in therefore it's not really a return of your own money....I don't get the direction you want to take this. My comment that retired people do not pay anymore money into FICA was pretty self-explanatory.

I've had a few Marts right now, so bear with me, but from what I know, you pay 6.2% SS tax up to the cut off. Being very generous and using today's caps, one would pay 6.2% of a max of $128,000 or just under $8K. (this is what you'd pay, forget about your employer)

If I had paid $8K (in reality less than that) for 30 years, or $240K, and now get $20K in benefits each year, I should see a break even in 12 years; in fact, should I live to be 85, having taken it at 62 I should've been paid $450K on my $240K.

I suspect my argument is missing something so I'm open to critique.

 

[Offgrid Organic Farmer]

Perhaps you should let Congress and the IRS know of their mistake. They seem to think it's a tax.

That is only levied on those people who have a SS policy.

 

[ivinsfan]

I've had a few Marts right now, so bear with me, but from what I know, you pay 6.2% SS tax up to the cut off. Being very generous and using today's caps, one would pay 6.2% of a max of $128,000 or just under $8K. (this is what you'd pay, forget about your employer)

If I had paid $8K (in reality less than that) for 30 years, or $240K, and now get $20K in benefits each year, I should see a break even in 12 years; in fact, should I live to be 85, having taken it at 62 I should've been paid $450K on my $240K.

I suspect my argument is missing something so I'm open to critique.

there is no critique. I was just pointing very few people if any get the exactsame amount of SS that they paid in, so in response to a previous poster, no it's not your own money coming back to you.

And what it a Mart?

 

[ivinsfan]

That is only levied on those people who have a SS policy.

Why are you using the term policy? What point are you trying to make with that term. I'm having trouble understanding what point you are trying to make.

 

[ivinsfan]

I read a blog by a Canadian who got seriously sick while in the US, and required urgent care.

After getting stabilized, he contacted his provincial government, and they decided to fly him back on a chartered plane with an accompanying medic, compared to letting him getting treated by the US hospital where he was admitted. The reason: it cost less to fly him back for treatment, as they would have to reimburse the US hospital for the cost.

PS: It's not that I am fond of the Canadian system, but since when did Canadians get free treatments in the US?



As George Orwell explained in his "Animal Farm" story, all animals are equal, but some are more equal than others.

But seriously...



SS is a tax. It's not like your 401k and IRA. If you die before 62, you get nothing. If you live long, you make out well.

Rightly or wrongly, that's the way it is. US Supreme Court back in 1960 in the case of Flemming v. Nestor already said that Congress could change the benefit however it wanted. If they said "tough luck you got nothing" like they did with Nestor, then you had absolutely no recourse.

All this started because I said retired people don't pay SS taxes...heaven help me..

 

[NW-Bound]

Well, SS is by definition a tax on earned income. It is not levied on interest income, nor on stock dividends.

It's kind of crummy, when you are taxed on income that you sweat and toil to get, but not on income that comes from your capital while you surf the Web and BS on a retirement forum. But I have been enjoying this, so why do I bring this up? As Orwell said, some animals are more equal than others.

At some point, when they need to beef up SS funding, they may tax everything. Then, we retired people will pay SS on everything. See what you think about that!

Now, will they do SS tax on SS benefits? Heck, why not?

 

[Offgrid Organic Farmer]

Why are you using the term policy? What point are you trying to make with that term. I'm having trouble understanding what point you are trying to make.

When an individual applies for a policy and then pays into his/her policy for 40-quarters. Then their policy is mature, and they become eligible for SS benefits when they reach retirement age.

If you fail to apply for a policy, or if you fail to pay into your policy for 40-quarters than you do not get a 'retirement' from it.

That does not describe a 'tax'.

 

[ivinsfan]

When an individual applies for a policy and then pays into his/her policy for 40-quarters. Then their policy is mature, and they become eligible for SS benefits when they reach retirement age.

If you fail to apply for a policy, or if you fail to pay into your policy for 40-quarters than you do not get a 'retirement' from it.

That does not describe a 'tax'.

Are you serious..

 

[daylatedollarshort]

According to Fidelity, Social Security is part of Old-Age, Survivors, and Disability Insurance (OASDI), a social welfare and insurance program managed by the U.S. federal government.

 

[Offgrid Organic Farmer]

Are you serious..

Yes.

If you decide that you want to be a part of SS, and if you then put money into it, then you get the benefit of that decision.

I have known a lot of people who decided to do otherwise.

 

[FUEGO]

According to Fidelity, Social Security is part of Old-Age, Survivors, and Disability Insurance (OASDI), a social welfare and insurance program managed by the U.S. federal government.

So you're saying there are going to be a bunch of folks in their 60's and 70's on this forum accepting welfare from the government in spite of their seven figure net worths?

I know it's legal, but it really bothers me. Am I overreacting?

 

[FUEGO]

Yes.

If you decide that you want to be a part of SS, and if you then put money into it, then you get the benefit of that decision.

I have known a lot of people who decided to do otherwise.

Define "decide".

 

[ivinsfan]

So you're saying there are going to be a bunch of folks in their 60's and 70's on this forum accepting welfare from the government in spite of their seven figure net worths?

I know it's legal, but it really bothers me. Am I overreacting?

Don't be so touchy Fuego Are you telling us that you will not be taking your SS checks?

 

[ivinsfan]

Yes.

If you decide that you want to be a part of SS, and if you then put money into it, then you get the benefit of that decision.

I have known a lot of people who decided to do otherwise.

Which people?....

 

[Moemg]

So you're saying there are going to be a bunch of folks in their 60's and 70's on this forum accepting welfare from the government in spite of their seven figure net worths?

I know it's legal, but it really bothers me. Am I overreacting?

How is it welfare when we paid into it for years in my case 40 years ?

 

[pb4uski]

I would dispute the 85% figure you showed in Item B. Survivor and DI payouts are 28% of the total, not 15%.

https://www.ssa.gov/OACT/TR/2018/tr2018.pdf

On page 43 (Table III.A5), the total payments for 2017 is 941,461. Payments to retired workers and auxiliaries are 680,233. That's 72%, of the total. [It happens to be 85% of payments to retired workers+survivors only, not including DI in the denominator).
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Good for you.

I was intentionally being conservative, with 28% the return is even better. Perhaps it was 28% in 2017, but what was it in each year from 1970 to 2012?

 

[Texas Proud]

I've had a few Marts right now, so bear with me, but from what I know, you pay 6.2% SS tax up to the cut off. Being very generous and using today's caps, one would pay 6.2% of a max of $128,000 or just under $8K. (this is what you'd pay, forget about your employer)

If I had paid $8K (in reality less than that) for 30 years, or $240K, and now get $20K in benefits each year, I should see a break even in 12 years; in fact, should I live to be 85, having taken it at 62 I should've been paid $450K on my $240K.

I suspect my argument is missing something so I'm open to critique.

You cannot look at what is taxed today and multiply it by so many years... when I first was on SS the max was something like $40K and it was less...


Go take a look at your stmts and it will tell you how much you have put into the system... I would be big money it is not $240K... probably $120K is closer...

 

[Texas Proud]

That is only levied on those people who have a SS policy.

When an individual applies for a policy and then pays into his/her policy for 40-quarters. Then their policy is mature, and they become eligible for SS benefits when they reach retirement age.

If you fail to apply for a policy, or if you fail to pay into your policy for 40-quarters than you do not get a 'retirement' from it.

That does not describe a 'tax'.

Boy, has someone got you snookered....


And there is no option to NOT pay SS taxes (yes, taxes)... if you choose not to do so you are breaking the law... or not making any earned income... BTW, farming is earned income....

 

[brucethebroker]

the original poster started off the blog talking about younger people leaving their jobs and getting virtually free health care...it is what is ,so far there hasn't been any personal bashing so lets try and keep it that way....

Sorry, but I don't see any "personal" bashing in my comment. However, if you were offended, please accept my apology.

 

[marko]

So you're saying there are going to be a bunch of folks in their 60's and 70's on this forum accepting welfare from the government in spite of their seven figure net worths?

I know it's legal, but it really bothers me.

Are you talking about SS, ACA, Medicare or the over 65 tax break?

I'm in! I've paid millions in taxes over my life; I'm now saying "where's mine?".