Only 8% of workers 35-44 plan to retire by age 67

[IronWing]

For 2022, only your first $147,000 of income is taxed but for determining benefits only that income is counted. Those who claim that the funding problem will be solved by removing that limit and taxing all income don't factor into that the benefit's would also increase if we include that additional income for determining benefits. For example if someone is working as a Google Engineer in the bay area and makes $250k, they are capped at $147k for determining future social security benefits. If you include income above $147k and you tax it, they would potentially have a 50-70% increase in social security benefits. Unless the objective is to keep the benefits capped at the lower level but increase the SS tax base.

This view sets the poor peasants against the slightly better off peasants. If you’re worried about the cap or taxing wages, you’re not the rich. Subject capital gains to SS taxes with no addition to benefits to restore the tax base. Income concentration at the top, taken in non-wage form is what gutted the tax base.

 

[fskimospy]

For 2022, only your first $147,000 of income is taxed but for determining benefits only that income is counted. Those who claim that the funding problem will be solved by removing that limit and taxing all income don't factor into that the benefit's would also increase if we include that additional income for determining benefits. For example if someone is working as a Google Engineer in the bay area and makes $250k, they are capped at $147k for determining future social security benefits. If you include income above $147k and you tax it, they would potentially have a 50-70% increase in social security benefits. Unless the objective is to keep the benefits capped at the lower level but increase the SS tax base.

This is true to some extent but also social security is progressive in structure so benefits don’t scale proportionately with payments.

 

[Brovane]

This is true to some extent but also social security is progressive in structure so benefits don’t scale proportionately with payments.

They don't scale proportionally but you still get more money as your income that is taxed increases. I just wonder if the people claiming we could balance social security by taxing all income include that income in calculating benefits?

 

[skyking]

that would be the plan. the high earners are far less likely to depend on the SS for the bulk of their retirement.

 

[Ken g6]

They don't scale proportionally but you still get more money as your income that is taxed increases. I just wonder if the people claiming we could balance social security by taxing all income include that income in calculating benefits?

There's also the argument that the bill wouldn't come due for several years. We just need to get over the hump of the baby boomers and then SS should be set until, I'm guessing, Millennials.

 

[Paratus]

They don't scale proportionally but you still get more money as your income that is taxed increases. I just wonder if the people claiming we could balance social security by taxing all income include that income in calculating benefits?

it’s a good point about including further benefits if the tax able amount is raised.

If I recall currently it’s roughly 90% of the first $1000/month you make, then 32% of the next $4000 and then 15% from $5000 up to ~$10,000 (numbers approximate)

Could fix the issue by adding a couple more percentage dropping the % to 5%, 1% and .01% while extending the brackets exponentially.

 

[Brovane]

This view sets the poor peasants against the slightly better off peasants. If you’re worried about the cap or taxing wages, you’re not the rich. Subject capital gains to SS taxes with no addition to benefits to restore the tax base. Income concentration at the top, taken in non-wage form is what gutted the tax base.

Would you also apply SS tax to non-wage income from those who are retired and taking money out of tax advantage saving plans like 401k's and IRA's? How about government workers on a pension who are not part of SS but have a 403(b) plan and are taking money out during retirement?

 

[GoPackGo]

That's why they call them "entitlements" because we who paid into them, feel we should be entitled to them. But truth is, the government can cancel them at any time and you don't have a right to them any more than you have a right to medical care in this country. Although it is unlikely republicans would get rid of them (as their voters are often older and depend on them) I do think they will let them slowly widdle away until they pay almost nothing. "There are currently 2.7 covered workers per each Social Security beneficiary. By 2035, there will be 2.3 covered workers for each beneficiary. " This will be unsustainable without a massive SS tax increase.

Ask yourself, is your paycheck an entitlement?

 

[vi edit]

Would you also apply SS tax to non-wage income from those who are retired and taking money out of tax advantage saving plans like 401k's and IRA's? How about government workers on a pension who are not part of SS but have a 403(b) plan and are taking money out during retirement?

That gets a little messy. Personally, the point is to encourage people to save. And with IRA's and 401k's you at least have contribution limits. It's not like you are hiding millions a year into a 401k or IRA. You can only put about 20k into a 401k a year right now. So it's not like that is ripe for abuse. Roth's are post tax so you already paid on that. IRA's only allow $6,000 a year. Again, not a big vehicle to abuse savings/wealth growth.

There are so many other places to look to for tax abuse, those two really aren't it.

 

[Brovane]

That gets a little messy. Personally, the point is to encourage people to save. And with IRA's and 401k's you at least have contribution limits. It's not like you are hiding millions a year into a 401k or IRA. You can only put about 20k into a 401k a year right now. So it's not like that is ripe for abuse. Roth's are post tax so you already paid on that. IRA's only allow $6,000 a year. Again, not a big vehicle to abuse savings/wealth growth.

There are so many other places to look to for tax abuse, those two really aren't it.

The talk about applying SS tax to non-wage income has me concerned that the actual people who are the intended targets will find a way with their highly paid CPA's to dodge that tax and the people who will get hosed are of much more modest means.

 

[vi edit]

By non-wage income I think the intent is more along the lines of personally owned stocks and stock options that can be liquidated conveniently and gamed with carried over losses or other advantageous accounting. Think of Musk conveniently cashing out 8.5 billion in Tesla stock to pay for Twitter.

But I understand the importance of noting the distinction and appreciate how much closer we need to pay attention to what we want vs how we say what we want. Words matter.

 

[KB]

Ask yourself, is your paycheck an entitlement?

This is a false comparison as a paycheck and SS are not the same. My employer agrees to pay me a paycheck and if they do not, then I can stop working. I can sue my employer for unpaid wages too. If the government decides not to pay you SS, you bend over and take it. They can continue to take SS wages from your paycheck and you cannot sue the federal government over this.
I am not saying we should get rid of SS. I feel anyone who paid into them should get them, and the government should promise to pay them, but the government never made such a promise, thus they are entitlements and somewhere, someone in the future will have to pay for it.

I believe bills have been proosed that would guarantee SS to those who pay it, but it hasn't passed, so for now they will remain entitlements, not rights, not guarantees.

Social Security Guarantee Act of 2022 (2022 - H.R. 7652)

To guarantee the right of individuals to receive Social Security benefits under title II of the Social Security Act in full with an accurate annual cost-of-living adjustment.

www.govtrack.us

 

[Bitek]

IDK, I try to save quite a bit and still worry about having enough. I'd be happy retiring around 55-60... with retirement meaning a slower paced job, less hours, more hobbyish.

My target is to have about $3M or so between us, plus my pension, and SS being a bonus (if it exists). It's a stretch by 60, but I could get away with less.

Just need to avoid some big medical issue and expense...

 

[KB]

IDK, I try to save quite a bit and still worry about having enough. I'd be happy retiring around 55-60... with retirement meaning a slower paced job, less hours, more hobbyish.

My target is to have about $3M or so between us, plus my pension, and SS being a bonus (if it exists). It's a stretch by 60, but I could get away with less.

Just need to avoid some big medical issue and expense...

If you had $3M invested and the stock market returned 6 - 10%/year you would have $180,000 to $300,000/year. With pension and SS, you would be filthy rich in 98% of the country. I could retire on $50,000/year with the house paid off and health insurance covered.

 

[Paratus]

That gets a little messy. Personally, the point is to encourage people to save. And with IRA's and 401k's you at least have contribution limits. It's not like you are hiding millions a year into a 401k or IRA. You can only put about 20k into a 401k a year right now. So it's not like that is ripe for abuse. Roth's are post tax so you already paid on that. IRA's only allow $6,000 a year. Again, not a big vehicle to abuse savings/wealth growth.

There are so many other places to look to for tax abuse, those two really aren't it.

You would think so but there is a loophole for the Roth. Musks partner at Pay-Pal, Peter Thiel managed to roll thousands of shares of Pay-Pal into his Roth when they were worth cents. Once it went public the value skyrocketed. His Roth was worth ~$5B in 2019.

Lord of the Roths: How Tech Mogul Peter Thiel Turned a Retirement Account for the Middle Class Into a $5 Billion Tax-Free Piggy Bank

 

[Bitek]

If you had $3M invested and the stock market returned 6 - 10%/year you would have $180,000 to $300,000/year. With pension and SS, you would be filthy rich in 98% of the country. I could retire on $50,000/year with the house paid off and health insurance covered.

I'm planning very pessimistically and planning to live a long time (95). 10% is high, and medical bills can be devastating, and I still need to run the gauntlet of kids college costs.

Overall, plan for worst, then gives me room to punch out early if/when I get sick of working.