Social Security for me? What if...?

[maestro8]

So I just got my paycheck and I'm sitting here and looking over the numbers. Not so good. I've been in a bit of a pinch, what with rent, vehicle repairs and utility bills all running over their alloted amount in my pie-in-the-sky budget.

What really chaps my hide is that I landed a great job right out of college, and I'm getting the salary I asked for (and I highballed the HR rep, too :cool: ), but for several reasons there's quite a discrepancy between gross and net. Just under 29% is going to taxes, including 7% for social security tax. I was hoping I could start putting some money away for a rainy day, but I'm barely able to save $100 a month now.

I haven't been following the news as closely as I should, but I'm getting the impression that I'll never see any social security income when I get older. So I'm pissing 7% of my income away every month, into a fund from which I'll never benefit.

What happens when I retire and qualify for this nonexistent Social Security? I realize the gov't never signed a contract with me saying I'm guaranteed said "Security" but I'm contracted with my own personal freedom to pay the tax (i.e. pay or jail). I feel like I should be able to sue the gov't to get my money back... I mean how is it right that we pay for something we never get? Isn't that fraud? There has to be some sort of accountability somewhere...

I know there aren't any solid answers for my questions, but I know there are some smart and well-read people on these fora, and I'd like their input... and some pot-shots from the peanut gallery, too. How do you think the "younger generation" can make some sense of this future fiacso?

[Gilby]

Not only are you paying 7%, but your employer is also paying an additional 7%. For those that are self employed, we pay 15.3% in to this government forced ponzi scam (ok, some does go to cover medicare, which also appears useless).


I'm all for a class action lawsuit against our fraudulent government...

[cathwood]

The situation is so bad in the UK that the government has admitted that there will not be enough money for my generation to live off when we retire, so we have all been advised to pay into private pension schemes as well as social security payments.

In one way I am lucky as the people I work for have one of the best pension schemes around. In one way I am unlucky as I did not start work until I was 23yrs old (spending the time after I left school bringing up my first two children), so I will not get full benefit from the pension.

I really don't know what is going to happen to people who do not pay into a pension. Dire povery I suppose.

Cathy

[Wheel Rider]

... I was hoping I could start putting some money away for a rainy day, but I'm barely able to save $100 a month now.
Keep saving, whatever you can. Every little bit helps. Don't expect Social Security to be there when you retire then if you do get anything, it will be a bonus.

Keep in mind that Social Security was not (and still is not) intended to be a retirement pension. It was intended to be supplemental income during retirement. People who thought they could retire on just Social Security have been seriously disappointed.

[underdog]

I'm totally with you on this one, however, it is a tax and as such we're all required to pay it (sucks, don't it?) The other issue is, so far those who put into the system do get money back out of it in the form of regular payments until they croak. I'm not sure how survivor benifits work. Until the system runs out of money and people are no longer getting paid, there are no grounds for a law suit. So far our government isn't in agreement that the money is going to someday run out (I personally think its' innevitable). If and when it does I say go for the law suit. I still think we ought to be suing them over having to pay any income tax. My understand is that income tax was implemented as a TEMPORARY, stop gap measure to help us finance World War 1. Well, the good ol' government sure got used to having that nice lump of free money in their pockets.

[maestro8]

some does go to cover medicare, which also appears useless
Actually, I've got a separate line item on my deductions for medicare, which takes 1.5% of my income. Agreed, though, that it's next to useless.

Keep in mind that Social Security ... is not intended to be a retirement pension
I got a "Social Security Statement" last year from the U.S. Treasury (or whomever) and it said at age 65 I could expect a $100/month income from them. What's that going to supplement?

I've opened a personal 401k that I'm putting some pre-tax income into... so Soc Sec isn't the only basket I'm putting my eggs in. I'm playing things out as if I'll never get any money from the gov't.

[Seager]

I'm living comfortably off 9$/hr right now (roughly 18.7k a year, no benefits) so if your making more than me (and I'm sure you are) you may just need to re-evaulate how you are managing your money or where you shop. :)

Or learn to dumpster dive.

[Wheel Rider]

I got a "Social Security Statement" last year from the U.S. Treasury (or whomever) and it said at age 65 I could expect a $100/month income from them. What's that going to supplement?

By the time you retire, that might buy you lunch.

Sounds like you have a plan for retirement.

[Gilby]

Until the system runs out of money and people are no longer getting paid, there are no grounds for a law suit. So far our government isn't in agreement that the money is going to someday run out (I personally think its' innevitable). If and when it does I say go for the law suit.

No grounds for a law suit? If any other person or company were to do it, there would be grounds for a lawsuit. It's a simple ponzi scheme, current distributions are being made with current payments going in. This is listed as number 8 on the FTC's dirty dozen scams.

I still think we ought to be suing them over having to pay any income tax. My understand is that income tax was implemented as a TEMPORARY, stop gap measure to help us finance World War 1. Well, the good ol' government sure got used to having that nice lump of free money in their pockets.

Yeah, income tax should be abolished. How much time and money is wasted each year for everyone to do their income taxes? Quite a bit for me, at least. The current system is way too complicated. Replace the income tax with a sales tax or some other simpler method. So far, the best proposal I've seen is the Fairtax (http://www.fairtax.org/). It'd be so much easier to calculate the percentage of sales verses the current system.

[maestro8]

I'm living comfortably off 9$/hr right now
And I lived comfortably off $9/hr too... almost 10 years ago! Back then I didn't mind sharing a small house with 3 other people, with shipping crates for furniture, and eating macaroni and cheese for dinner.

Now I'm supporting my g/f while she attends grad. school, living in a house that I can call my own (as long as I pay rent :) ) with a yard and a garage, buying a newer car to replace my old piece of cr*p, saving for retirement, taking vacations to places I've never been before, etc. etc. etc. It's a different quality of life.

If I really wanted to go hobo I'd sell everything I own, quit my job, get a van and drive back and forth across the entire continent... and I still might do that one day. I'd just like to have a little nest egg before I go. I don't want to die naked, wet and hungry, even though that's how I was born.

[mscalisi]

In the bay area, CA that will get you a decent one bedroom apartment in a decent neighborhood. ...so long as you don't need to eat or buy clothing or get anywhere you can't walk (or unicycle).

...but it won't buy you a studio condo in the ghetto (even if you do starve).

I'm living comfortably off 9$/hr right now (roughly 18.7k a year, no benefits) so if your making more than me (and I'm sure you are) you may just need to re-evaulate how you are managing your money or where you shop. :)

Or learn to dumpster dive.

[Wheel Rider]

My understand is that income tax was implemented as a TEMPORARY, stop gap measure to help us finance World War 1.
The first income tax paid for the Civil War. At that time it was temporary.

[subsonic87]

The first income tax paid for the Civil War. At that time it was temporary.
True. And it was revoked after the war, and many people were concerned about its Constitutionality when it was re-introduced in the 1910s.

[phlegm]

In the bay area, CA that will get you a decent one bedroom apartment in a decent neighborhood. ...so long as you don't need to eat or buy clothing or get anywhere you can't walk (or unicycle).

...but it won't buy you a studio condo in the ghetto (even if you do starve).

According to this salary calculator (http://www.homefair.com/homefair/servlet/ActionServlet?pid=200&tool=salarycalculator&previousPage=116&cid=homefair&fromState=IA&toState=CA&salary=18000&fromCity=1901855&toCity=0653000&ownrent=own), Oakland, CA (in the bay area) requires twice the income of Ames, Iowa for a comparable lifestyle. Although, unless you have a large down payment available, $18/hour will probably not get you into any real estate.

[mscalisi]

According to this Mortgage Calculator (30 year @ %6) (http://www.mortgage-calc.com/mortgage/howmuchafford.html) you only need to make 77k a year (about $37 hourly) to afford This lovely one bedroom condo in my hood (http://www.craigslist.org/eby/rfs/111926359.html)

According to this salary calculator (http://www.homefair.com/homefair/servlet/ActionServlet?pid=200&tool=salarycalculator&previousPage=116&cid=homefair&fromState=IA&toState=CA&salary=18000&fromCity=1901855&toCity=0653000&ownrent=own), Oakland, CA (in the bay area) requires twice the income of Ames, Iowa for a comparable lifestyle. Although, unless you have a large down payment available, $18/hour will probably not get you into any real estate.

[ThisGuyIKnow]

Social Security is like insurance. You pay into it but unless something happens to you, you don't get anything out of it. If you get seriously injured and can't work you'll at least get a small stipend from the government to help pay your bills.

[mscalisi]

At 14% income, that very expensive insurance.

Social Security is like insurance. You pay into it but unless something happens to you, you don't get anything out of it. If you get seriously injured and can't work you'll at least get a small stipend from the government to help pay your bills.

[ThisGuyIKnow]

At 14% income, that very expensive insurance.

7% not 14% and if you look at the payouts they can be pretty big, especially when calculated over the remainder of a lifetime, with no more payment of premiums.

Put speaking of i was just handed my pay check I am only paying 10.9% federal and 7.6% FICA. I really can't complain.

[Gilby]

7% not 14% and if you look at the payouts they can be pretty big, especially when calculated over the remainder of a lifetime, with no more payment of premiums.

Put speaking of i was just handed my pay check I am only paying 10.9% federal and 7.6% FICA. I really can't complain.
While it is set up as an illusion making it only look like 7.6% to most, you really are paying 14.1%. From the SSA.gov website (http://www.ssa.gov/ny/exploring-taxes.htm):
The 7.65 percent goes into the social security funds. Your employer matches that amount.
If your employer did not match that, they could effectively pay you that much more in income, so it is coming ot of your pocket.

[maestro8]

if you look at the payouts they can be pretty big
Um, whose payouts? I'm not getting any payouts. And what Grampa's getting today sure ain't gonna be what I'll get when I'm older.

I really can't complain.
If you're not outraged, you're not paying attention.

[mscalisi]

I'm not positive, but I think that 7.65*2 might be somewhere between 15.299999 and 15.300001...not 14.1.

...but you can't really trust the math of someone who failed calculus.

While it is set up as an illusion making it only look like 7.6% to most, you really are paying 14.1%. From the SSA.gov website (http://www.ssa.gov/ny/exploring-taxes.htm):

If your employer did not match that, they could effectively pay you that much more in income, so it is coming ot of your pocket.

[johnfoss]

You don't get to count the additional 7%, as it's not part of your income. Your *employer* gets to count that. Plus any matching they do for your 401k. And other benefits, such as medial, that you may receive if you're lucky.
Just under 29% is going to taxes, including 7% for social security tax.And when your income goes up, oh joy! You get to be in a higher bracket and pay at least 33% for starters, and up from there!

But you really do need to put away whatever you can, starting as early as possible. The numbers are pretty amazing for how much you need to invest to reach, say a million dollars by your 65th birthday. For every year you don't put money away, you have to add $45,000 to the total; something like that. I just saw something along these lines on TV the other night. The first-best place to put this is in your 401k, where it's not only pre-tax, but also harder for you to become weak and spend it.
I realize the gov't never signed a contract with me saying I'm guaranteed said "Security" but I'm contracted with my own personal freedom to pay the tax (i.e. pay or jail). I feel like I should be able to sue the gov't to get my money back... I mean how is it right that we pay for something we never get?
Think of the generations before you, who paid for a huge arsenal of nuclear weapons that they never got to use. Who should they sue? In other words, I find it easier to lump it all together as "stuff we don't have a choice about."

Better perhaps to concentrate on waste in government spending. Even if we are taxed using different methods, things will still cost the same so the impact to your income will be about equal. Give or take wasteful spending, and stuff we don't think our tax dollars should be paying for.

BTW, Social Security and Medicare are used all the time, not necessarily by old people. It also applies to disabled people or others who otherwise need help. In many cases these are people who, if they didn't receive this help, would be destitute and in the long run end up costing us taxpayers a lot *more* money because they didn't get a little help early, instead of a lot of help later on.
How do you think the "younger generation" can make some sense of this future fiacso?
If you put it in terms of "younger generation," one of the trends that gets noticed is peoples' seeming lack of discipline in personal spending these days. It's way too easy to get credit, and ruin it, and our society seems to be very needy of things that are not necessities. I need the latest iPod. or the '06 KH even though my current uni works fine. The "older generation" is a lot more used to the idea of doing without, or saving up *first.*

Of course one way to improve your situation might be to move to Iowa, or some other place where the cost of living is a lot less. Of course you'll need to find a job in that area, and have to deal with the weather... yeah. That's why I live out here too!

[mscalisi]

Oh you'll get plenty of money once you hit 67, unless you're one of those snobs who thinks they're too good for cat food.

Seriously, if you had the 15% back in your pocket and invested it over your lifetime, you'd be much better off.

Of course you really can't have it back since they need it to cover current benifits. It's a system that pretty much everyone agrees is in trouble, and you will likely benefit little from it by the time you reach retirement age.

Um, whose payouts? I'm not getting any payouts. And what Grampa's getting today sure ain't gonna be what I'll get when I'm older.


If you're not outraged, you're not paying attention.

[Gilby]

I'm not positive, but I think that 7.65*2 might be somewhere between 15.299999 and 15.300001...not 14.1.

...but you can't really trust the math of someone who failed calculus. I thought someone would point that out.

Your employer pays 7.65% of your income, making your effective income $1.0765 for every dollar (assuming no fica was paid at all). Since you pay 7.65%, you are only getting $0.9235 for every dollar. (1.0765-0.9235)/1.0765 is 14.21% (looks like I did have a typo above).