Social Security Is Not 'Insurance'

[srkruzich]

Redcliff, your going to rant til your blue in the face over social security.  I for one am getting what i paid into it as much as i can.  I doubt i'll ever get what i paid in since it is only doled out to me in paltry sums.   You see for years i was writing out thousands of dollars to pay into social security every year on top of the thousands of dollars i paid to feds.  Now every worker out there that is within grasp of getting some of what they paid in back is going to do so. 

It doesn't matter at this point in time what the founding fathers intended.  It is what it is.  You have a federal government that FORCED everyone to pay into this with the PROMISE of a check if they survive long enough which is a contract.  A payment is made for a service that is to be provided, providing you abide by the rules set forth by the parties involved. 

What needs to happen is that the Govt needs to settle up on its contract, stop the SS as we know it for anyone under 35, and the rest get paid out.

[Diane Amberg]

But still, not every one who is working pays into SS or takes out.  It depends on their contract. The Feds aren't always involved. Some states and local Governments have a different way of doing it.  I won't risk boring you with details. But people who put in will eventually get it back, if you live to retire. Not all do. Al's mom was one of those. She had a very good income all of her working life and died just before SS age. All that money stayed in the pot. Reducing the possible retirement and draw age to 62, even though the payback is a little less, that still means less going into the pot also.
  It's not really a Ponzi because then the catch is, "If we make money, you make money." With SS at least you will get your own money back if you live long enough.  And payment adjustments for cost of living can be made. With a true Ponzi that never happens. Other changes over the years added more and more people to the payout side who may or may not have ever put money in. Then the Gov't raiding the pot and starting with the IOU business really hurt. If young people are smart they will save as if SS never existed, regardless if they put in or not.
  I can't imagine why that" little old man" that Teresa mentioned was so mad. Surely he knew that SS payments stop when the person dies and no longer needs them, and usually that $200.00 burial payment goes to the funeral home directly. It did with both my parents. He wouldn't have gotten it anyway. Perhaps he should have figured out how much his mother had actually put into the SS pot. Chances are she had been getting back more than she had ever put in and was alive for sometime before SS ever started, which I believe was 1935. Don't forget too that there was a time when a person's SS deduct was fulfilled before the end of the year for people who had good pay. I know Al didn't have anything taken out in Nov. and Dec. because he had paid in the max. Now I don't think there is a max. Steve, I don't know how old you are but do you remember when your SS deduction topped out and stopped?

[Teresa]

Does it top out?? It seems like ours has increased the past few years..
It is all so darn confusing to me.. makes me have a headache..

[Diane Amberg]

I checked since this came up. It's 6.27% up to $106,800.00 in earned income or $6,621.60. So if you make $130,00.00 in income from a job, or more than one job, once you paid in your 6.27% share into SS ,or $6,621.60, the rest would have no SS withholding. So there still is a top out for some people. I think I have that right. If there are any CPAs on here, please let me know if I didn't work that correctly.

[twirldoggy]

I remember that it used to top out.  People were overjoyed when they reached that point.  Especially the doctors employed by the state. 

[Patriot]

But still, not every one who is working pays into SS or takes out.  It depends on their contract. The Feds aren't always involved.

Huh?  Depends on their contract?  Don't manage a payroll do ya? Exemptions (and there are few) from FICA & Medicare tax withholding is clearly outlined in IRS Pub 15 and have nothing to do with any contract.  

Some states and local Governments have a different way of doing it.  I won't risk boring you with details.

Please explain what state & local governments have to do with Social Security taxation/payments.  I really wanna know.  I've been making a payroll for the last 20+ years and have never had a state/local taxing authority involved in SS taxation.  Tell me, please so I can share your knowledge with my past & present tax accountants/lawyers & make ammends to those jurisdictions I may have underpaid.  

It's not really a Ponzi because then the catch is, "If we make money, you make money." With SS at least you will get your own money back if you live long enough.  And payment adjustments for cost of living can be made. With a true Ponzi that never happens.

A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors.


If taking money from today's worker & employer to pay it to yesterday's worker doesn't fit that definition, then the definition is wrong. And no, you aren't getting your own contributions back.

Don't forget too that there was a time when a person's SS deduct was fulfilled before the end of the year for people who had good pay.

Was a time?  Still is.  It's called the Social Security Wage Base.  For CY 2009/2010/2011, that would be $106,800

I know Al didn't have anything taken out in Nov. and Dec. because he had paid in the max.

Which simply means Alan had received a gross wage of at least $106,800 by November.  His contribution to that point was $6,621.60 which had been matched by the employer.  Making the total contribution  $13243.20 for the year.

Now I don't think there is a max.

Wrong again, diane.

Steve, I don't know how old you are but do you remember when your SS deduction topped out and stopped?

Age has nothing to do with anything.  Even a person receiving SS who goes back to work will find their wages are subject to FICA withholding.

[Patriot]

For what it's worth:

IRS Circular E, Publication 15 can be found here:  http://www.irs.gov/app/picklist/list/publicationsNoticesPdf.html

Click on the Publ 15 link on that page.

[Wilma]

Patriot, do you really think it is necessary to tell Diane that she is wrong again when she says she "thinks" something?  Aren't you being kind of picky?

Incidentally, it is good that someone can straighten us out on social security, but it is nicer to do it in a way that leaves out personalities.

My husband paid in the maximum several years and it was nice to have that extra in his pay check.  Then they started raising the maximum.

[srkruzich]

Steve, I don't know how old you are but do you remember when your SS deduction topped out and stopped?

I think it topped out at 96,000 when i was working, i maxed mine out every year for the last 10 years i worked, but I paid the full 17% into social security.   But i also had a lifetime of payments of 5k or more.  I started working at 14 years old.  I think i was 20 when i started paying 5k a year. i don't quite remember that far back.

[srkruzich]

Does it top out?? It seems like ours has increased the past few years..
It is all so darn confusing to me.. makes me have a headache..

I think the topout is around 120k or so now.