Living only on social security

hollydolly said:
yes we have no choice it's taken directly from our salary....
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It is over here as well, except for: self-employment, miscellaneous income (cash, most 1099, and similar), or cases where the employer provides a private pension and opts out of SS.


So something like eBay or YouTube income, or grass mowing for cash, undeclared tips, etc. means you are required to file the forms and pay into the system yourself. Failure to do so has penalties for undeclared income, but also decreases your SS payments once you start collecting SS because the amount is based on income history.

Normal employers silently make half of the SS contribution (part of your compensation but it doesn't appear on your pay statements) and the other half is visibly deducted from gross pay. That was a "trick" introduced to psychologically soften the blow of contributions while employed.

The self-employed and the giggers and "independent contractors" whinge bitterly, because they have to pay both halves visibly (to them).
 

dilettante said:
It is over here as well, except for: self-employment, miscellaneous income (cash, most 1099, and similar), or cases where the employer provides a private pension and opts out of SS.


So something like eBay or YouTube income, or grass mowing for cash, undeclared tips, etc. means you are required to file the forms and pay into the system yourself. Failure to do so has penalties for undeclared income, but also decreases your SS payments once you start collecting SS because the amount is based on income history.

Normal employers silently make half of the SS contribution (part of your compensation but it doesn't appear on your pay statements) and the other half is visibly deducted from gross pay. That was a "trick" introduced to psychologically soften the blow of contributions while employed.

The self-employed and the giggers and "independent contractors" whinge bitterly, because they have to pay both halves visibly (to them).
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yes but my response what to show that we do pay from our salaries an average of 1/3rd..including tax, and more over a certain threshold, yet our State pesnions are some of the lowest in the world...
 
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Hollydolly, that’s terrible. Since retiring I consult and pay both sides of SS which is fine because I’m glad that I can still work a little bit and really enjoy it. I laughed when I was notified by SS that my monthly benefit went up 6/month because of it.
 

mathjak107 said:
you are only charged for replicating a portion via fica taxes so no one should be comparing what they earned to what they get from ss
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You payout amount is derived from your earnings though: your FICA taxes are proportional to your income as you work. Of course there are other factors in the formula like "enrichment" at the low-income end and caps on annual FICA taxes and limits to how much anyone will get.

The amount given in annual SS statements before you start taking distribution payments is only an estimate based on most of the algorithm and other factors knowable at the time.

So the amount you draw monthly will indeed be proportional to your FICA contributions... aside from adjustments upward at the low end (bend points) and caps at the top. Well, that and a few additional things like inflation adjustments for each year in your top 35 years of income.

There are tons of videos explaining this stuff. Example:

 
dilettante said:
The self-employed and the giggers and "independent contractors" whinge bitterly, because they have to pay both halves visibly (to them).
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DH & I have been self employed for decades without whinging, never mind bitterly, about paying both employee & employer portions of SS. One son and his wife are both independent contractors (he's a video producer, she's an OT) by choice. Never heard them complain either. Ditto a friend who's a make-up artist for TV & movies.
 
hollydolly said:
yes but my response what to show that we do pay from our salaries an average of 1/3rd..including tax, and more over a certain threshold, yet our State pesnions are some of the lowest in the world...
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In the US, 6.2% of wages are paid by the employee to FICA (Social Security). That amount is then matched by the employer. So 12.4% of wages are paid into SS alone. Then there are federal and state income taxes, (up to $168,000/year, a little bit for Medicare, State Disability Insurance and Unemployment Insurance.

If someone earns $1000/week in California, their take home pay is $803.32.
If they earn $2000/week, take home pay is $1429.86 (higher income tax rates for higher earners)

SS taxes are paid against up to $168K in salary per year. After the combined total of $20,832 is paid, neither the employee nor the employer pay additional SS taxes for that particular employee until the following year.

In addition, there are state and local real estate taxes, and most states charge sales tax.
 
StarSong said:
DH & I have been self employed for decades without whinging, never mind bitterly, about paying both employee & employer portions of SS. One son and his wife are both independent contractors (he's a video producer, she's an OT) by choice. Never heard them complain either. Ditto a friend who's a make-up artist for TV & movies.
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Ok, that was over generalizing. But I know people in this situation who insist they are being ripped off.
 
StarSong said:
In the US, 6.2% of wages are paid by the employee to FICA (Social Security). That amount is then matched by the employer. So 12.4% of wages are paid into SS alone. Then there are federal and state income taxes, (up to $168,000/year, a little bit for Medicare, State Disability Insurance and Unemployment Insurance.

If someone earns $1000/week in California, their take home pay is $803.32.
If they earn $2000/week, take home pay is $1429.86 (higher income tax rates for higher earners)

SS taxes are paid against up to $168K in salary per year. After the combined total of $20,832 is paid, neither the employee nor the employer pay additional SS taxes for that particular employee until the following year.

In addition, there are state and local real estate taxes, and most states charge sales tax.
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pretty much the same here... but there's a difference between a private pension which the employee chooses to pay voluntarily and is often matched by the employer... and the state pension where everyone regardless of their earnings over !2,000 has to pay directly from their salaries approx one third...

How then can it be far that someone who has never or barely ever been in work can be paid roughty the same state pension amount when they retire as the person who we'll take your exmaple was earning £1000 per week.. and paying a 1/3rd of their earning into the pot...

Not fair at all...especially when the State pension is so ridiculously low as it is here...
 
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hollydolly said:
pretty much the same here... but there's a difference between a private pension which the employee chooses to pay voluntarily and is often matched by the employer... and the state pension where everyone regardless of their earnings over !2,000 has to pay directly from their salaries approx one third...

How then can it be far that someone who has never or barely ever been in work can be paid roughty the same state pension amount when they retire as the person who we'll take your exmaple was earning £1000 per week.. and paying a 1/3rd of their earning into the pot...

Not fair at all...especially when the State pension is so ridicuaously low as it is here...
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Wait - you pay 1/3 of your income for state pension alone? Or is that all payroll taxes combined?

Your and our private retirement plans through employers (generally called 401K) sound similar. We also have the ability to save for retirement via a tax-deferred program (IRAs) in addition to mandatory SS. SS is paid into by nearly everyone (teachers and some other public employees being notable exceptions).

Generally speaking, the amount we've paid in over 30-40 years, along with our age when we decide to start drawing SS, combine to determine the monthly benefit amount.

High earners with uninterrupted work patterns who delay benefits until age 70 receive far more each month than lower earners with employment gaps who opt to start collecting at 62. This despite the fact that benefits are deliberately more generous proportionately to lower earners.
 
StarSong said:
Your and our private retirement plans through employers (generally called 401K) sound similar. We also have the ability to save for retirement via a tax-deferred program (IRAs) in addition to mandatory SS. SS is paid into by nearly everyone (teachers and some other public employees being notable exceptions).
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401(k), 403(b), 457, and other provisions are Defined Contribution (DC) plans. Some of them have been around a long time but only applied to certain groups. Others came along later to replace Defined Benefit (DB) plans, traditional pensions. "Coincidentally" (wink, wink) this put a lot of money into the hands of layers of Wall Street middlemen instead of the experienced professionals who manage DB investments for employers. More welfare for New York, Connecticut, Delaware, California, etc. sucking the heartland dry.

Actually, very little of D.C. and eastern VA pay into SS, along with a lot of other Feds. Active military and their non-contract support staff are a large exception and do pay.

But the Federal bureaucracy is the main intended beneficiary of eliminating GPO and WEP, so they can work on the side and through revolving doors to those they regulated and such and claim SS at the enhanced level intended for low-income workers on top of fat DB pensions.
 
StarSong said:
Wait - you pay 1/3 of your income for state pension alone? Or is that all payroll taxes combined?

Your and our private retirement plans through employers (generally called 401K) sound similar. We also have the ability to save for retirement via a tax-deferred program (IRAs) in addition to mandatory SS. SS is paid into by nearly everyone (teachers and some other public employees being notable exceptions).

Generally speaking, the amount we've paid in over 30-40 years, along with our age when we decide to start drawing SS, combine to determine the monthly benefit amount.

High earners with uninterrupted work patterns who delay benefits until age 70 receive far more each month than lower earners with employment gaps who opt to start collecting at 62. This despite the fact that benefits are deliberately more generous proportionately to lower earners.
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Insurance and income Tax..takes approx a third from salaries under £50k



Basic rate£12,571 to £50,27020%
Higher rate£50,271 to £125,14040%
Additional rateover £125,14045%
 
dilettante said:
Retired SSA staff are warning that is anything an honest label would be "Unfairness Act" because it erodes the attempt to help those with low-income work careers and other honest actors who paid into the system. It undermines the integrity of a system that already has a serious funding shortfall arriving all too soon.

I suspect even if it passes and gets signed it will quickly be overturned in 2025.
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Did the government workers affected by WEP have a choice as to whether or not to contribute to SS? I suspect they did not. If not, then weren't they the victims of a poor, shortsighted government agency policies which ultimately negatively affected their employees? In other words, it was not their fault that they didn't pay into the system and they shouldn't be looked upon as if they are slackers in that regard IMO.

I worked for the city, then the state (same office) for 28 years before I retired. I thank God that although they were government agencies, SS was taken out of our pay. @Teacher Terry
 
OneEyedDiva said:
Did the government workers affected by WEP have a choice as to whether or not to contribute to SS? I suspect they did not. If not, then weren't they the victims of a poor, shortsighted government agency policies which ultimately negatively affected their employees?
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I suspect the history will show that those employees lobbied hard to be exempt from SS since they already had very comfortable DB pensions. It was a badge of honor to escape both "halves" of FICA and instead take the equivalent cash and/or benefits.

Nobody forced them to take those jobs or stick with them.

It's a lot like other jobs that offered pensions and benefits that required longevity of service to see the fruits. It was your choice whether to forego short-term opportunities elsewhere or stick it out if you valued those pensions and benefits.

None of this was "sprung on" any of them. New employee orientation covers these things. If they didn't care for the terms they could always move elsewhere once another opportunity arose.

In many States even teachers got a DB pension along with paying into SS. New hires may have been shuffled over to DC plus SS with time.

At our ages though it's pretty late in the game to wring our hands over what were our own decisions.
 
OneEyedDiva said:
In other words, it was not their fault that they didn't pay into the system and they shouldn't be looked upon as if they are slackers in that regard IMO.
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I'm not saying they are slackers. But they made their choice and a free ride on aspects of SS meant to help low-income workers is not warranted. They made good money and have good pensions compared to the working poor.

Eliminating this is why WEP and GPO exist.
 
hollydolly said:
Insurance and income Tax..takes approx a third from salaries under £50k



Basic rate£12,571 to £50,27020%
Higher rate£50,271 to £125,14040%
Additional rateover £125,14045%
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It's pretty similar here. SS is broken out separately, but the overall take-home rate versus earning rate looks to be roughly the same. High earners find ways to shield a lot of their income. No surprise there.
 
OneEyedDiva said:
Did the government workers affected by WEP have a choice as to whether or not to contribute to SS? I suspect they did not. If not, then weren't they the victims of a poor, shortsighted government agency policies which ultimately negatively affected their employees? In other words, it was not their fault that they didn't pay into the system and they shouldn't be looked upon as if they are slackers in that regard IMO.

I worked for the city, then the state (same office) for 28 years before I retired. I thank God that although they were government agencies, SS was taken out of our pay. @Teacher Terry
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Diva, WEP is fair for people that worked for the government for 30 years and had low paying jobs in high school and college since they would look like low earners. However, it’s not fair to people like me that split their professional career between the two systems.

Another poster on here has a different opinion which I am ignoring because discussing it with him is pointless. The senate has enough votes to pass it if it makes it to the floor for a vote. Everyone I know has been contacting their senators to request that it’s voted on.

It affects a lot of people in my state. It must be voted on by 12/31 or it’s dead. It is a bipartisan bill which is why it has widespread support.
 
You know who really gets the shaft in the US re: Social Security?
Spouses who stay home raising kids, working part time or not at all.
About $1,000.00/month IF you have at least 3 years making nearly 45k a year.
 
CooCooforCoCoPuffs said:
You know who really gets the shaft in the US re: Social Security?
Spouses who stay home raising kids, working part time or not at all.
About $1,000.00/month IF you have at least 3 years making nearly 45k a year.
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The deal with SS is. if you don't pay in, you don't collect against your own earnings. It isn't intended as welfare. Spousal benefits are 50%, not a bad deal for the situation you describe.

Like most women in my age group (now early 70s), I worked part-time from the age of 16, then full-time starting in my early 20s. Continued that until having children, then stayed home raising them for 10 years. Moved to part time work as they got older and transitioned to full-time. At 65 I went back to part-time work.

Most Americans have a 50-ish year work span (16-68). Choosing to stop while children are young might take 20 years, at most.

Despite a ten year gap, so far I've worked (and paid into SS) for 42 years.
 
StarSong said:
The deal with SS is. if you don't pay in, you don't collect against your own earnings. It isn't intended as welfare. Spousal benefits are 50%, not a bad deal for the situation you describe.

Like most women in my age group (now early 70s), I worked part-time from the age of 16, then full-time starting in my early 20s. Continued that until having children, then stayed home raising them for 10 years. Moved to part time work as they got older and transitioned to full-time. At 65 I went back to part-time work.

Most Americans have a 50-ish year work span (16-68). Choosing to stop while children are young might take 20 years, at most.

Despite a ten year gap, so far I've worked (and paid into SS) for 42 years.
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I remember my grandmother taking a job in the 60s so she could get her 20 quarters of payments into the Social Security system.

Every game has rules and people need to take a little time to understand the game of life.
 
hollydolly said:
Insurance and income Tax..takes approx a third from salaries under £50k



Basic rate£12,571 to £50,27020%
Higher rate£50,271 to £125,14040%
Additional rateover £125,14045%
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What else is withheld besides insurance and income tax to get them from 20% (one fifth) up to the approx one third (33%)??
 

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