Social security by the numbers

[cgasner1]

I’m curious if we can have a talk about social security without politics? Granted what has got my mind wondering on this is the tax on it may be lifted next year which will help a lot of people. So he is what’s been bugging me me the last couple days. At 38 I’ve paid over 200k into it. My question is basically why? For the 2025 year it is capped at just under 11k and you stop contributing at 176k. So once again why? Why is is capped at all? Why do we stop contributing at 176k? It’s designed to help people of less means to afford to live later in life why doesn’t it start being deducted from people making over 250k and go up from there? Im not a tax the rich mindset because I believe most people that make a lot of money do so for a reason and deserve it. So without bringing politics into this since both sides could have done something different and I don’t care to hear about it what is the reason for any of this? That 200k could have had a huge impact on my life up to this point. None of the current system makes any sense to me.

Edit @Big Fin & @Lostinthewoods if you wanna axe this before it starts no hard feelings I’ve just been pondering this a lot last few days

 

[mdhunter]

Well…I own my own business so I get the privilege of paying both sides of social security as the employer and the employee. As a double bonus when I retire my income will be high enough that I can pay tax again on whatever I qualify for.

Add to that people are living longer so the long term obligations to all tax payers will sink the countries finances without major reforms. IDK what’s not to like about the current set up.

 

[cgasner1]

So why not drop it from a 6.2% tax and do a flat rate of 3% and remove the 176k cap? Seems like it’s a tax on the people who make the least in this country so they can be taxed throughout life

 

[406dn]

The increase in life expectancy is largely a result of reduced infant and childhood mortality rates. Any observation of the general state of health of the average adult in the US, does not suggest they are going to live extremely long lives.

Like most of the other things wrong in the country, we know about it, and how to fix it. But, that would take some political courage and increased taxes, and or benefit cuts, to make the program solvent, for the longer term.

 

[Bob-WY]

Do you realize that could tributaries have a limit, but withdrawal later have a limit based on that 176k limit.

Not a valid reason for the cap, but it has a corresponding cap when you start collecting

 

[Beignet]

I don’t think your question is overly political since the entire body politic bears responsibility for the current state of the SS scheme.

But, I think the cap is set to limit the proportional benefits that would have to paid out later. I feel like there’d be quite a stink from higher earners if the cap were raised or eliminated without the benefits also being adjusted accordingly. It is curious since the goals of the program ostensibly align with those you mention.

Someone who is actually, ahem, a CPA or tax policy wonk can probably give a more detailed explanation though.

 

[Forkyfinder]

Most regressive tax in history

 

[Bullshot]

I am no accountant but the phrase “To the victor go the spoils” comes to mind. And most of “we” aren’t the victors.

 

[Nick87]

does not suggest they are going to live extremely long lives.

Source?

 

[INMT]

I bet a lot of folks don’t even know what the OASDI deduction on their paycheck is.

 

[Forkyfinder]

 

[Dan O]

Personally, I think the cap should be removed. Have a flat rate for everyone to keep it equal. Plus, if I'm not mistaken there may be some getting benefits other than the retirement benefit. But I may be wrong on that or not, time will tell.

One issue is there are some who SS is there only source of income. There seems some never planned for retirement or their jobs were so poorly paid they had to spend everything to get by. In today's world there are too many living paycheck to paycheck. Given that it would be darn hard to put money away for retirement. SS is far from perfect but for some folks it's all they have. And that's just plain sad!

 

[SAJ-99]

I’m curious if we can have a talk about social security without politics? Granted what has got my mind wondering on this is the tax on it may be lifted next year which will help a lot of people. So he is what’s been bugging me me the last couple days. At 38 I’ve paid over 200k into it. My question is basically why? For the 2025 year it is capped at just under 11k and you stop contributing at 176k. So once again why? Why is is capped at all? Why do we stop contributing at 176k? It’s designed to help people of less means to afford to live later in life why doesn’t it start being deducted from people making over 250k and go up from there? Im not a tax the rich mindset because I believe most people that make a lot of money do so for a reason and deserve it. So without bringing politics into this since both sides could have done something different and I don’t care to hear about it what is the reason for any of this? That 200k could have had a huge impact on my life up to this point. None of the current system makes any sense to me.

Edit @Big Fin & @Lostinthewoods if you wanna axe this before it starts no hard feelings I’ve just been pondering this a lot last few days

You can find threads in the money and finance section. I’m too tired to explain much tonight. There are a lot of bad takes on it. You can also start with the SS website. It has some history that helps explain why it was created. It is neither good or bad. People that pay in more than they take out have one take. Those on the opposite side have another.

 

[cgasner1]

I don’t think your question is overly political since the entire body politic bears responsibility for the current state of the SS scheme.

But, I think the cap is set to limit the proportional benefits that would have to paid out later. I feel like there’d be quite a stink from higher earners if the cap were raised or eliminated without the benefits also being adjusted accordingly. It is curious since the goals of the program ostensibly align with those you mention.

Someone who is actually, ahem, a CPA or tax policy wonk can probably give a more detailed explanation though.

So why not lift the cap on pay in and leave the cap on pay out? I feel this could turn political blaming current party or past and I don’t care to discuss that just the numbers none of it makes any sense to me

 

[cgasner1]

You can find threads in the money and finance section. I’m too tired to explain much tonight. There are a lot of bad takes on it. You can also start with the SS website. It has some history that helps explain why it was created. It is neither good or bad. People that pay in more than they take out have one take. Those on the opposite side have another.

I did do some reading on the ss website and it just made me really wonder why. Like I said we can just trash it if you guys want but I knew a few of you would probably have some logic in the matter

 

[cgasner1]

Personally, I think the cap should be removed. Have a flat rate for everyone to keep it equal. Plus, if I'm not mistaken there may be some getting benefits other than the retirement benefit. But I may be wrong on that or not, time will tell.

One issue is there are some who SS is there only source of income. There seems some never planned for retirement or their jobs were so poorly paid they had to spend everything to get by. In today's world there are too many living paycheck to paycheck. Given that it would be darn hard to put money away for retirement. SS is far from perfect but for some folks it's all they have. And that's just plain sad!

It makes me wonder my not drop it for 6.2% to a flat 3% and remove the 176k cap it would give the people at the bottom of the barrel a 3.2% raise and probably fund way more money into the ss system

 

[Beignet]

So why not lift the cap on pay in and leave the cap on pay out? I feel this could turn political blaming current party or past and I don’t care to discuss that just the numbers none of it makes any sense to me

Hopefully we’re all old enough to have a conversation about this without someone being like “them people are ruining our way of life!” Hopefully, ha!

If it were up to me I’d think raising or eliminating the cap but keeping a max distribution the same (adjusted for inflation) is a great idea.

I imagine that people who make more money than me might be upset at having to pay more over the course of their career but not receive any more than a certain amount at the end of it. Whether you think it’s right or wrong, wealth seems to have a proportional influence on policymaking.

It’d be a tough sell, but I personally believe there should be a point where it’s essentially said that “If you make more than this amount then congratulations for your good fortune and/or hard work, but we’re still taking xx% from your income and you can still only receive xx maximum amount when you retire.” I’m not a tax policy expert, but it’s my understanding that the US does this with other taxes. I’m personally at the very low of a certain income bracket am still in same bracket as people who make, what seems to me, to be a whole lot more money. That stings a little, but thems the breaks.

Happy the program exists and such, but something about it ain’t fair and that perception of fairness probably differs by income.

 

[Wildabeest]

Whether right or wrong, SS was setup to make people believe their contributions funded their future payouts. We all know that’s not exactly true, but it’s why your contributions are capped - because your maximum monthly benefit payment post retirement is also capped. If I make a bazillion dollars a year, and my contribution is not capped, but my monthly payout after retirement is capped at $5k, that feels more like welfare for others than a retirement savings plan for me. That’s the logic.

 

[Dan O]

It makes me wonder my not drop it for 6.2% to a flat 3% and remove the 176k cap it would give the people at the bottom of the barrel a 3.2% raise and probably fund way more money into the ss system

I have no idea what the rate needs to be. If the cap was removed I could see a reduction in the tax rate and that would help those in the lower income group.

 

[BuzzH]

It makes me wonder my not drop it for 6.2% to a flat 3% and remove the 176k cap it would give the people at the bottom of the barrel a 3.2% raise and probably fund way more money into the ss system

Not to mention that those in the lower brackets, COULD potentially sock away a bit more in their 401's/IRA's.

The entire system is not made to benefit the working class and in particular not the working poor. That's why I've never been a big fan of 401's over a pension. The 401's are great if you can afford to contribute, if you can't you're only getting SS.