The truth about Social Security: it's a big rip-off

[glockmail]

Have you ever calculated how much you would have in retirement funds if you had invested all of your social security taxes, incrementally as you have paid them, in a safe investment portfolio, such as municipal bonds (5-6%, almost no risk), or corporate real estate (7%, slight risk). After 45 years of working most people would be millionaires. And if they die the day after they retire, their spouses or children get to fight over the money.

The only difference between you, with your mortgage, college bills, and retirement worries, vs. the old money people living in mansions, is that their grandparents had enough money in the bank to set them up in a comfortable lifestyle. These people perpetuate their wealth by adding to the principle to keep up with inflation and living off the interest. The current social security system virtually assures that this will never happen to the middle and lower classes. Since we are forced to pay so much taxes, we can't afford to retire!

Say at age 20 you make $20,000/yr ($1667/mo) and pay 6.2% of your income into a fund matched by your employer, and continue this practice until you retire at age 65. After 45 years in a slight risk investment (and with a 45 year term it is almost inconceivable that a "slight risk" investment would have any risk), earning 7%, you would have $783,802 dollars in the bank. (Let's forget inflation here because we will assume that your raises would at least keep up with inflation.) By continuing your 7% investment, never touching the principle, you would be able to draw $4572 in interest per month upon retirement. That's 2.74 times your pre-retirement income. A low risk, 5% investment would earn you almost twice your pre-retirement income.

And the numbers simply multiply with income. Under this scenario, a retired couple would have over $1.5 million in the bank and earn over $100,000 per year in interest.

Compare that with the paltry amount given back by the government in social security. But here is the real rub: after you die, all your principle can be given to your children and grandchildren, basically setting them with "old money". Comparatively, your social security “investment” evaporates, and some people die unable to pay for a decent funeral.

The Republican plan is to transition from the system that we have now to full privatization over several decades, to allow support of the retired and retiring who have been duped all these years. You and I won’t see full privatization, but maybe our grandchildren will.

This is the truth that Democrats don't want you to know. By throwing crumbs, rich liberals like Kennedy and Edwards will continue to be supported by poor people. After all, a retired couple living on 100 large doesn’t really care about the cost of prescription drugs, universal health care, or the current question of social security. They are unlikely to vote for a Democrat.

Do the math. Be smart about your life decisions. See more at http://calculator.socialsecurity.org/.

 

[Rico]

Yes it's a scheme to rob the poor in particular. Think about it. The poor live the shortest lives of any group so they collect the least of what they payed. Black American men are particular losers in this scheme. Their current life expectancy for White males is an average of seven-and-a-half years longer than African American males.

It's a losing proposition for everyone below 50 right now. I'll bet a dime to a dollar that within ten years the Ponzi scheme is bust. It's a shame the American people are either too ignorant or too fearful to make it on their own. Sad.

I'm self employed and thus pay more than what a wage earner pays in SS taxes. I feel like I'm being stolen from right in front of my face and my hands are tied.

 

[insein]

Sadly, it will never happen. We will just keep going till its completely broke then blame it on the Republicans and their greedy tax cuts for the rich. People will buy it. Taxes will be raised. Politicians will get richer. People will be happy despite being poorer because of class warfare.

What a wonderful country we live in.

 

[BaronVonBigmeat]

I consider my SS deductions from each check to be my primary obstacle towards a secure retirement. I'll have to check, but I think it exceeds my 401k contribution. If I throw in medicare, I'm almost certain it does.

Besides the obvious differences in retirement income, the ability to help out grandkids with college, etc...just imagine how much stronger the economy would be without this giant leech on everyone's paycheck. How many more jobs would there be because of increased investment, how many more jobs would there be because employers can afford to hire more people, etc. How many people would give more to private charity if only they had more money, and how many fewer people would need it in the first place. FDR and his gang of merry Mussolini-and-Stalin-admiring socialists didn't create this wonderful new charity program, they simply shifted charity from the private sector to Washington.

edit: someone's probably going to claim that without SS, there will be some who are too dumb to save for the future. Perhaps, but there are some who are too dumb to brush their teeth in the morning. Should we have a government tooth-brushing program?

 

[insein]

I consider my SS deductions from each check to be my primary obstacle towards a secure retirement. I'll have to check, but I think it exceeds my 401k contribution. If I throw in medicare, I'm almost certain it does.

Besides the obvious differences in retirement income, the ability to help out grandkids with college, etc...just imagine how much stronger the economy would be without this giant leech on everyone's paycheck. How many more jobs would there be because of increased investment, how many more jobs would there be because employers can afford to hire more people, etc. How many people would give more to private charity if only they had more money, and how many fewer people would need it in the first place. FDR and his gang of merry Mussolini-and-Stalin-admiring socialists didn't create this wonderful new charity program, they simply shifted charity from the private sector to Washington.

edit: someone's probably going to claim that without SS, there will be some who are too dumb to save for the future. Perhaps, but there are some who are too dumb to brush their teeth in the morning. Should we have a government tooth-brushing program?

Right on target, BVM. Unfortunately, those same stupid people that can't brush their teeth are the ones that will cling for dear life to SS because the politicians say they will die without it.

 

[Mr. P]

Social security is a crime!! Check this out and you’ll understand why.
*************************************************

BRIEF ANALYSIS
No. 215
For immediate release:
Monday, November 4, 1996

From the inception of Social Security in 1935, its proponents have encouraged Americans to think of it as a type of private pension plan. Now most people realize that the Social Security Trust Funds are trust funds in name only and consist of nothing more than IOUs the government owes to itself. Various polls show most Americans are skeptical that Social Security will be there when they retire.
However, employees of three Texas counties that opted out of the Social Security program more than a decade ago are earning an average 6.5 percent interest, compounded daily, on their vested personal retirement accounts.

Can a privatized Social Security system work? It already does. Let's see how.

Read the rest.....WARNING YOU'LL JUST GET PISSED.
http://www.ncpa.org/ba/ba215.html

 

[glockmail]

I consider my SS deductions from each check to be my primary obstacle towards a secure retirement. I'll have to check, but I think it exceeds my 401k contribution. ...

Take whatever you pay in and double it to account for your employers "contribution", which you would otherwise get in pay if SS was abolished.

 

[glockmail]

...

However, employees of three Texas counties that opted out of the Social Security program more than a decade ago are earning an average 6.5 percent interest, compounded daily, on their vested personal retirement accounts. ...

Nice. The guv'mint opting out of its own system. Priceless.

 

[BaronVonBigmeat]

Take whatever you pay in and double it to account for your employers "contribution", which you would otherwise get in pay if SS was abolished.

Yeah, I forgot about that one. Most of it their savings would probably go towards labor, or it might be used to fund research or expansion, it's hard to say; but any of these would be better than what we have now.

Just for the sake of clarity, let's take my specific example. I earn slightly less than the national average. Every two weeks, my gross paycheck is just shy of $1500. After all deductions (including 6% for 401k), I get about $1050. Let's do some math.

1440 - ( 1440 x .06) - 1050 = $303.

I'm going on memory here, and that sounds a little high. So, let's say $200 every two weeks. That would be a little bit over $400 a month (or, $656/month if the $303 is correct). That's a conservative estimate, AND we're not counting employer contributions either.

As I said, my salary is right around the national average, or a little under. If every person, on average, had an extra $400+ a month to spend, invest, or donate...my god. And it's not preposterous to suggest that, without SS, Mr. Average would really have more like $600~$1200 a month extra, considering what the employer pays. My brother and I could match what grandma's getting from SS now, and still have money left over.

 

[Mr. P]

Take whatever you pay in and double it to account for your employers "contribution", which you would otherwise get in pay if SS was abolished.

In theory this is true. However, the employer may not give that savings to the employee, then again the option is there.

 

[Mr.Conley]

If I recall people with incomes greater than $90,000 a year don't pay SS taxes. That's my plan. One of my life goals is to never, ever put a dime into Social Security.

 

[no1tovote4]

If I recall people with incomes greater than $90,000 a year don't pay SS taxes. That's my plan. One of my life goals is to never, ever put a dime into Social Security.

They pay on the first $90 K, but after that they do not pay more. So, they still pay SS Taxes, just not on all of their money made.

If you don't want to pay payroll taxes, create a Corporation, run it, and pay yourself fees from the corporation.... It isn't payroll if you are an officer of the Corporation.

 

[Mr. P]

They pay on the first $90 K, but after that they do not pay more. So, they still pay SS Taxes, just not on all of their money made.

If you don't want to pay payroll taxes, create a Corporation, run it, and pay yourself fees from the corporation.... It isn't payroll if you are an officer of the Corporation.

Nice if it would really work well. Problem is, you can only do so much of that, not enough to live on, otherwise every small business owner draw all their income that way and never pay taxes. They don't.

 

[no1tovote4]

Nice if it would really work well. Problem is, you can only do so much of that, not enough to live on, otherwise every small business owner draw all their income that way and never pay taxes. They don't.

It's because most small business owners never incorporate. They almost always LLC or DBA, this makes it so that all payments are payroll...

One must not draw a salary from the corporation, that is also payroll. The officers are not employees, they therefore do not have to pay SS taxes on their fee structure... If they are paid a salary then they too have to pay SS taxes on that first 90K.

You have to structure it so that most everything you have is owned by the corporation, the bills are paid by it, etc. The fees can be mighty low and you can still be living quite the lifestyle.

 

[Mr. P]

It's because most small business owners never incorporate. They almost always LLC or DBA, this makes it so that all payments are payroll...

One must not draw a salary from the corporation, that is also payroll. The officers are not employees, they therefore do not have to pay SS taxes on their fee structure... If they are paid a salary then they too have to pay SS taxes on that first 90K.

You have to structure it so that most everything you have is owned by the corporation, the bills are paid by it, etc. The fees can be mighty low and you can still be living quite the lifestyle.

I don't think you're correct. You are describing a C-corp. Whether you are paid as an employee or officer there will still be taxes due, which include SS tax.

You can’t escape the tax man ( if you’re running a legit business), at least no farther than the first audit.

 

[no1tovote4]

I don't think you're correct. You are describing a C-corp. Whether you are paid as an employee or officer there will still be taxes due, which include SS tax.

You can’t escape the tax man ( if you’re running a legit business), at least no farther than the first audit.

Once again, it depends on how they are paid out. If you are paid a salary there is tax due on SS. If you are paid... Man, I probably have the wrong word here... a fee instead you do not have a SS bill, just income...

I'll look up exactly what I am talking about. I have to talk to my friend, who sets these up for people for a living to get the exact details. I won't forget, and I'll add this thread to subscriptions so that I can give better details. And I wasn't describing a C-Corp, I was describing an S-Corp.

 

[manu1959]

i call bullshit........

may dad paid in for 25 years.....he died when i was 20.....

my dad's benefits put me through college

 

[Mr. P]

Once again, it depends on how they are paid out. If you are paid a salary there is tax due on SS. If you are paid... Man, I probably have the wrong word here... a fee instead you do not have a SS bill, just income...

I'll look up exactly what I am talking about. I have to talk to my friend, who sets these up for people for a living to get the exact details. I won't forget, and I'll add this thread to subscriptions so that I can give better details. And I wasn't describing a C-Corp, I was describing an S-Corp.

I know about s-corp (I are one) and it doesn't work that way.

The other problem is, no matter how you recieve pay it will be taxed and that tax includes ss tax.

 

[Mr. P]

i call bullshit........

may dad paid in for 25 years.....he died when i was 20.....

my dad's benefits put me through college

Call BS on what?

 

[glockmail]

Yeah, I forgot about that one. Most of it their savings would probably go towards labor, or it might be used to fund research or expansion, it's hard to say; but any of these would be better than what we have now.

Just for the sake of clarity, let's take my specific example. I earn slightly less than the national average. Every two weeks, my gross paycheck is just shy of $1500. After all deductions (including 6% for 401k), I get about $1050. Let's do some math.

1440 - ( 1440 x .06) - 1050 = $303.

I'm going on memory here, and that sounds a little high. So, let's say $200 every two weeks. That would be a little bit over $400 a month (or, $656/month if the $303 is correct). That's a conservative estimate, AND we're not counting employer contributions either.

As I said, my salary is right around the national average, or a little under. If every person, on average, had an extra $400+ a month to spend, invest, or donate...my god. And it's not preposterous to suggest that, without SS, Mr. Average would really have more like $600~$1200 a month extra, considering what the employer pays. My brother and I could match what grandma's getting from SS now, and still have money left over.

Right now your employer has an earmark for you called "salary costs". It includes your gross, employment taxes "their SS contributions", and all benefits. Under this plan these costs would not change. The SS contributions would simply go to your private account instead of the guv'mint.

Regardless of your earnings, the math is the same: after 45 years you would retire with an income 2-3 times higher than when you were working. And when you die the money stays with your estate.