Skip to comments.Do SS retirees now die before collecting all their lifetime contributions?
Posted on 11/20/2008 10:38:12 AM PST by Conservababe
Retirees receiving Social Security seem to believe that they will die before collecting all their lifetime contributions to the system, leaving a balance. But is this the truth? I know there are many variables so I was hoping someone could point me to stats.
I know exactly what you’re asking. I don’t know the answer, but I get what you’re asking. Not sure why everyone else is misunderstanding the question.
“If you and employer paid max SS (not medicare) tax, your libaility this year is about 13,000”
Owning my own company, I pay my part and the match, have maxed out each year since leaving the US Army.
By all calculators, I get something like a negative 3% return.
Low wage earners and those who worked intermittently will have a better chance of collecting more than was seized from them. This is so because benefits are skewed toward more benefits to those who didn’t pay in as much.
Some who worked and paid the maximum over a 45 year period probably wouldn’t make it. Assume he starts at 20 and works until 65. However, someone who only worked for 40 quarters (10 years) but qualified for benefits might very well receive more than paid in.
The 62 vs 65 retirement age breakeven age is 78, I believe. If you know you will live to be 78 or older, you collect more if you wait until 65 to retire.
Notice I used the word “seized” instead of “contribution.” There is no such thing as a tax “contribution.” They don’t ask, they just take.
Older workers are much further ahead and get a much quicker pay-out if you will.
My baby daughter doesn't have an SSN yet. I could choose to not get her one, but then I'd lose out on some $3000/year in tax deductions. Since the feds get some $60,000 as a result (20 years of deductions), and get it 20 years early, and get it in pre-inflationary dollars, there really is no choice in the matter. You don't get to choose whether to contribute, just how - and they basically make it more painful to not contribute ("collecting benefits" aside) than to do so.
There really is no choice in the matter. You can choose to not opt-in (and I wish I hadn't), IF your parent's don't opt you in first (which they are hugely pressured to do).
They dont ask, they just take.
Yeah. They TAKE money out of my paycheck, and then refuse to give $3000/yr back if I don't sign my daughter up for Social Security.
If you really want to make yourself sick, do what I did one day. I got every W2 from the time I started working in 1968. Yes, I still have almost all of them.
Build an excel spreadsheet with all the SS taxes you and your employers have paid in. Then put in various assumptions for earnings for the money had you invested it yourself.
The Supreme Court ruled in Flemming v. Nestor that there is no legal right to Social Security benefits. Source: Flemming V. Nestor, 363 U.S. 603, 610�11 (1960)
FYI: Today's retirees are getting back, on average, much more than they have paid into the system. This is a Ponzi scheme. Future workers will not be so lucky.
Don’t forget: unlike money you save in your 401-K, money in ‘your SS account’ doesn’t become an asset for your estate. Instead, the government is able to remove you as a liability when you die and keep any excess contributions. Thus, as the government gets deeper into socialist programs like healthcare, they will have increasing incentives to ‘clear their books.’ That means denying you needed surgery or medication.
The question is how long will it take for a person to receive as much money from the SS-system as they paid into it. Never-mind that it’s not their money they’re getting back from the SS system. That’s a sad truth and a “given”. Rather, the question is how long will it take the average retiree to receive from the Social Security welfare system the same number of dollars that they paid in SS taxes??? It’s an interesting question.
I will be working and paying SS taxes for at least another 20 years (I’m a church pastor and will be working until I’m beyond 70 years of age). At the current SS taxation rate (I’m self employed), and assuming only a cost-of-living increase in income over the next 20 years, and at the current figure for what I will draw every month after retirement, I will have to live to be about 94 years old before I have received from the system the same number of dollars as I paid into it. That assumes I’ll get anything from the system at all ... something which I doubt.
Based upon current longevity figures, plus my family’s history, I have a good chance of making it to 94 ... and then some.
Thankfully, I am fully vested in a fantastic non-profit (Church sponsored) pension program and am making contributions to the non-profit version of the 401k ... so ... I’ll not be dependent upon SS checks for my retirement income. Frankly, I don’t expect to get any SS checks. I’m sure there will be some kind of system in-place by the time I retire to help cover health care and to provide some kind of credits for cash payments to retirees based upon the current SS system, but I don’t expect to be getting from the SS welfare system the number of dollars I paid into it. Not even close.
What people “put in” is less than what they “get out”. Exact numbers escape me, but you should periodically be getting a letter from the gov’t explaining how much YOU “put in” and how much you would “get out”, and the latter is greater than the former.
There is, however, a catch:
You don’t get out - later - what you put in. You get out what others are putting in NOW. It takes 4-5 people paying into Social Security to support 1 person getting money out of it. Problem is, the number of people capable/available of putting money in is diminishing relative to the number of people getting money out. At some point in the not too distant future, there simply will not be enough money going in to cover the money going out - and that’s when the system will collapse, and those “contributing” won’t get anything back. Sure, the FICA tax could be increased, but between that and other federal spending, you just can’t tax people at/beyond 100%.
There is no Social Security “trust fund”, “lock box”, “investment”, or whatever. Money goes in, and goes right back out.
A few years ago I read that the typical SS recipient receives in his/her first four years the amount s/he paid in ... but that doesn’t account for inflation, interest, etc. And I don’t have any documentation, it was just a point often raised when SS reform would be raised.
The question is irrelevant. All their contributions were spent the year they contributed to them. Makes no difference if they contributed $1 or $1,000,000.
Don’t forget that if you pass away before you’re old enough to start drawing SS, you get exactly $0 of the thousands that were taken from you when you worked.
An important point. A 100% tax rate is slavery in every respect. If that be true, what is a 25% tax rate? 10%? 50%?
You dont know much about SS do you? You get a monthly payment..thats it.
Most people drew out more than they put in. That’s one reason it’s going broke.
I agree the return is negative but I still think you would get your money back before you reach 200. I was using todays $ figure for payout on SS to get the 30k per year. If you use anticipated $ adjusted for inflation the number rises to 50k per year. In either event we are screwed.
If you started working in 1967 and retired in 2007 and your salary always exceeded the maximum, then over those 40 years you and your employer would have paid $ 220,012.30 into Social Security.
This makes your $1500 per month social security check look pretty lousy.
If it makes you feel any better, you can look at the bright side and see how many government bureaucrats you have employed on your dime over the past 40 years.
Social Security is no better than Las Vegas. The HOUSE keeps 90% of the players contributions.