High earners/savers: How do you feel about social security?

[Anonymous]

We're very high earners (millions) and SS withholding and the program itself doesn't bother me at all. Like PP said I'd much rather pay a small percentage of my income to avoid millions of elderly people living in poverty, and know/hope I have the same insurance policy too. I also assume I'll get nothing someday when I'm elderly, but I cross my fingers the program continues to function.

Also let's be real, rich people complain a lot about taxes, but our portfolio has still grown by multiple millions over the past few years. We save over a million a year. If we had no federal taxes we'd probably save two million a year, but I don't think it would change anything about our lives. I do wish they'd stop flushing our tax money on wars though. It drives me crazy we keep spending on wars but refuse to socialize health care or education.

[Anonymous]

Anonymous wrote:Squeezing donut hole families, not high earners. Release the cap and tax ALL income, that would be taxing the high earners

Enough with the donut hole nonsense. Your lifestyle choices are the problem.

Its unfair to force people to pay in then not give them the full benefits.

[Anonymous]

I retired early with a pretty high net worth and elected to start taking SS at 63. My spouse never worked and gets the spousal benefit which is 50 percent of my SS. Together it’s just under 50k and most of it is taxable income. It’s nice to have.

Unlike SS, Medicare premiums are income based and the two of us pay quite a bit. We’re close to $1000 a month all in. And I can see from my SS statement that between me and my employer over the years we paid close to $500,000 in Medicare taxes.

So yea I kinda feel entitled.

[Anonymous]

Anonymous wrote:We're very high earners (millions) and SS withholding and the program itself doesn't bother me at all. Like PP said I'd much rather pay a small percentage of my income to avoid millions of elderly people living in poverty, and know/hope I have the same insurance policy too. I also assume I'll get nothing someday when I'm elderly, but I cross my fingers the program continues to function.

Also let's be real, rich people complain a lot about taxes, but our portfolio has still grown by multiple millions over the past few years. We save over a million a year. If we had no federal taxes we'd probably save two million a year, but I don't think it would change anything about our lives. I do wish they'd stop flushing our tax money on wars though. It drives me crazy we keep spending on wars but refuse to socialize health care or education.

With social security many elderly still live in poverty. My MIL got $1K a month. It put her slighly over by maybe $50 so she could not get medicaid, but did get food stamps.

[Anonymous]

Anonymous wrote:We're very high earners (millions) and SS withholding and the program itself doesn't bother me at all. Like PP said I'd much rather pay a small percentage of my income to avoid millions of elderly people living in poverty, and know/hope I have the same insurance policy too. I also assume I'll get nothing someday when I'm elderly, but I cross my fingers the program continues to function.

Also let's be real, rich people complain a lot about taxes, but our portfolio has still grown by multiple millions over the past few years. We save over a million a year. If we had no federal taxes we'd probably save two million a year, but I don't think it would change anything about our lives. I do wish they'd stop flushing our tax money on wars though. It drives me crazy we keep spending on wars but refuse to socialize health care or education.

Nice humblebrag

[Anonymous]

Anonymous wrote:I have paid in only $22k in nearly 30 years. Should get it all back within 2-3 years at 62.
Lots of wage theft since I worked without contract and employers didn't feel like paying.
I had no idea how the paychecks work. I was lucky to get one that didn't bounce.
I saved and invested what I could. Planning to live til 99 to get stolen wages back from SS even though it should have come from several employers. Not my place to make sure they followed the employment law.

Bigger issue is you didn't feel like paying in.

[Anonymous]

Anonymous wrote:I don't understand why they have a wage cap. Just take it from all wages and that will solve the insolvency problems pretty quick.

+1,000

I don’t get the political hesitance to remove the cap. Simplest way to fix the problem.

[Anonymous]

Anonymous wrote:We're very high earners (millions) and SS withholding and the program itself doesn't bother me at all. Like PP said I'd much rather pay a small percentage of my income to avoid millions of elderly people living in poverty, and know/hope I have the same insurance policy too. I also assume I'll get nothing someday when I'm elderly, but I cross my fingers the program continues to function.

Also let's be real, rich people complain a lot about taxes, but our portfolio has still grown by multiple millions over the past few years. We save over a million a year. If we had no federal taxes we'd probably save two million a year, but I don't think it would change anything about our lives. I do wish they'd stop flushing our tax money on wars though. It drives me crazy we keep spending on wars but refuse to socialize health care or education.

Why are you commenting on a post by yourself?

[Anonymous]

Anonymous wrote:I've been a fan of means-testing SS ever since I started studying tax policy over 20 years ago.

I used to think this was a good idea, until it dawned on me that it only serves to reward spendthrift/irresponsible behavior.

Take two neighbors:
- both earn a solid UMC income;
- one guy lives frugally and saves for retirement and after working saving for 45 years has a decent amount of retirement savings - not wealthy but enough to afford a retirement;
- the other neighbor spends all his money, takes fancy vacations, drives new cars, etc., doesn’t save for retirement

If we means-test them both at 68 (or whatever the retirement age is by then) one looks “poor” and the other does not. So we subsidize the irresponsible neighbor and he ends up living a retirement lifestyle funded by taxpayers while the responsible guy gets nothing, after living a much more frugal life.

Perhaps “means testing” based on “how much did you earn during your working years?” instead of “how much do you have saved by retirement age?” would be a better way to do it. Of course, you can’t stop people from being irresponsible with their money, so we’d likely end up with a lot of people who COULD have saved for their retirement, but didn’t.

I understand that only the first X amount of income is subject to social security taxes. I guess the first thing we can fix is to remove that cap and increase benefits somewhat for the higher earners (since they’ll pay so much more in taxes).

All that said, I’m living frugally and saving for retirement and not counting on SS because I expect to get screwed by the govt as I’ve outlined above, because it’s just the way I was raised.

There’s always a problem with these govt subsidies, including SS — they incentivize bad behavior and penalize good behavior.

[Anonymous]

Anonymous wrote:

Anonymous wrote:I don't understand why they have a wage cap. Just take it from all wages and that will solve the insolvency problems pretty quick.

+1,000

I don’t get the political hesitance to remove the cap. Simplest way to fix the problem.

I don't understand why they don't remove the cap either. It would fix the issue entirely and most people at that income level (including me) won't miss the money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We would prefer to not rely on it and get a refund

+1 million

Government and bureaucrats just take take take. It’s all free money for them.

Is there a brain between your ears, or just empty space?

[Anonymous]

Anonymous wrote:We are high income and I think we should pay a social security tax on ALL of our earnings, plus have a cap.

Why? I'm from a lower middle class background and have many elderly relatives who only have social security to support them on old age.

This is the correct answer. Most of SS's funding issues go away if you lift the cap.

[Anonymous]

Anonymous wrote:We should have enough without. I don't understand why they have a wage cap. Just take it from all wages and that will solve the insolvency problems pretty quick.

Along with the wage cap is a "cap on payout"

Do you really think someone/a couple making $800K-$1M+ per year should be paying another 7% on all income over $184K and never getting anything for it? As it is, we already pay ~2% on everything we earn...and in return we will pay $1.2-1.4K per person for medicare (medical, supplement and prescription coverage) in retirement. That amount is more than what we pay for COBRA for a great plan that includes dental and vision. You cannot just simply keep taxing individuals/families who are "high income" but not stratosphere income levels. We already contribute plenty when that $900K is W2 income

[Anonymous]

Anonymous wrote:

Anonymous wrote:If you means test social security, I'm going to stop saving and start spending. I'm not going to continue to sacrifice now to save so I can lose part of my retirement income while others live it up.

You wouldn't lose part of your retirement income. You would just get a lower return on investment than people who make less money. You'd still get 100k per year (assuming you're part of a couple) which is honestly a lot of money for a retiree with no dependents. But not enough for a lavish retirement with travel and nice housing and eating out all the time, so obviously to do that you'd have to save.

Social security contributions are already capped so the system already avoids taxing most of high earners income for SS. If they got rid of the cap AND limited payouts to 100k, I could see the argument for what you are talking about. But since all your income above the cap is already untaxed for SS, I don't see how limiting total payouts to a perfectly reasonable amount (but not lavish amount) would deter you from continuing to save money in your individual non-SS accounts.

Max each person can get now is only ~$63K/year. So for a couple that's $126K, being cut to $100K. I'd much rather that happen than pay more taxes.but it still sucks

[Anonymous]

Anonymous wrote:I don't understand why people above a certain income must participate at all doesn't make sense

Because we pay 7% of our income (up to 184K) for 35-40+ years for the purpose of collecting SS at retirement. We didn't have a choice in that. Oh and we also pay 37% fed taxes on everything over $700K, 2% on entire income for medicare. At some point, the solution cannot be to simply tax someone making $1.5M at 75%+. At some point, people have to be responsible and save for their own retirement (or have their kids assist them)