Social security by the numbers

[Redmt]

I worked lots of cash jobs.
I then paid the taxes due.

Hey Hank, I was curious if there was a requirement to pay into SS? I received 1099's for cash labor jobs that obviously I paid the taxes due but never paid into SS for them.

 

[SAJ-99]

Hey Hank, I was curious if there was a requirement to pay into SS? I received 1099's for cash labor jobs that obviously I paid the taxes due but never paid into SS for them.

Go in and set up a login and check your account.

Plan for retirement

Estimate your benefit amount, determine when to apply, and explore other factors that may affect your retirement planning.

www.ssa.gov

 

[Redmt]

Go in and set up a login and check your account.

Plan for retirement

Estimate your benefit amount, determine when to apply, and explore other factors that may affect your retirement planning.

www.ssa.gov

I've been on SS for 10 years.

 

[SAJ-99]

I've been on SS for 10 years.

Then why the question. To over simplify, If you paid taxes on a 1099, you paid into SS. The government put it in the right spot.

 

[Wildabeest]

Hey Hank, I was curious if there was a requirement to pay into SS? I received 1099's for cash labor jobs that obviously I paid the taxes due but never paid into SS for them.

It’s often referred to as “self employment tax”. You pay both the employee and employer portions towards both SS and Medicare if you have income reported on a 1099-NEC.

 

[hank4elk]

Hey Hank, I was curious if there was a requirement to pay into SS? I received 1099's for cash labor jobs that obviously I paid the taxes due but never paid into SS for them.

I had asked the IRS about what my share was on my income. It was applied to SS when I paid taxes.
Workers Comp. was a separate issue. Deductions ,etc...

I even paid my SS dues when I left temp. city job to county. So there was no gaps to ?

Many fed and government agencies do not pay in, in exchange for pension,health ,etc.. plans.
My neighbor worked for USDA-FS for 35 years and is now having issues with Medicare and SS payments.
He's playing catch up. Luckily he has a pension to use.

 

[Bonasababy]

Same here and I look at my own family as the perfect example.

My grandfather had a RR pension, did not draw SS, and he lived very comfortably and retired in his late 50's, 58 IIRC. Lived to be 85.

My Dad has 2 pensions, from Union controlled pensions that are a majority of his retirement income, as well as union covered secondary health insurance for both him and my Mother. Without that, they would be in a pretty tough spot with just SS income.

I also agree with you that the average American blue collar worker is really getting the shit end of the stick with a 401 type program. Mainly because most simply can't afford to put much more than 2-3% company match into a 401. Further, many don't have the time or training, etc. to know HOW to invest within the 401 programs. I work with a bunch of people that simply don't have the experience, knowledge, or mentors to show them and explain the different investment options within a 401 type program. I was lucky that I have a very close friend that gave me advice, and good solid advice, in how to invest a long time ago. I owe him, and I'm thankful every time I look at my investments that he was willing to help me out.

Make no mistake the 401 deal is a much better deal for corporate America than the working class, also a much better deal for those that make 6 figures than for those that don't (for obvious reasons).

The American working class was sold a bill of goods by dissolving DBP's, and many are about to find out.

Many employers are taking steps to simplify their retirement plans for workers, often going with fewer choices which I am not a fan of as I have been handling our investments for years and rather have many options, but I get the sentiment.

If I didn't have a pension I would sunk a lot more into our retirement plan and done OK--but I know many are not that capable or disciplined.

 

[npaden]

If memory serves, before an employer can offer a lump sum option on a defined benefit pension, they have to meet a threshold, of pension solvency.

A company offers a pension in order to attract and retain employees. It is NOT the employee's fault, that a pension fund is insufficient. More than a few companies defer making payments into their pension fund, assuming a later date will be a time easier to make the payment.

imo, it is no different than an employee saving for their retirement. If you skip payments into the fund, it will likely come up short, when the retirement date arrives.

These pension plans were in the "green" zone under PBGC the entire time. They were not skipping payments into the fund, actually the opposite, they were paying extra voluntarily.

Even with that they are up to close to 35% of current employee salaries to stay in the green zone. It is more a matter of demographics than anything else. Same thing is happening with social security. More people taking out of the plans than putting into the plans. To make the math work on a pension plan the contribution rates have to go up.

They are getting to the point that most companies are having a hard time attracting and retaining employees because they can't afford to pay a competitive salary AND pay in as much as 35% of salary into a defined benefit plan. Most younger employees would rather make $100,000 and have a 8% match on a 401k plan than make $80,000 and have $28,000 contributed on their behalf into a defined benefit plan. Same $108,000 out of pocket for the employer but they are going to get way more interest in the job posting with the first option.

I don't blame them, if you do the math the employee is going to be way better off deferring $20,000 of their own salary plus the $8,000 match into a 401k than they would under a defined benefit plan. A defined benefit plan is investing for the entire block of employees and can't invest as aggressively as a younger employee could. Most of my pension plans are looking at expected rates of return just barely over 7% where I think a aggressively invested 20 or 30 year old should be expecting closer to 9%.

All that said, I think the average person is probably not going to earn the $100,000 and put $20,000 into their 401k. They are going to earn the $100,000 and hopefully at least put in $8,000 to get the match but some aren't even going to do that.

We are moving (actually I think we already are there) to an instant gratification culture and people want the money now and they will worry about retirement when they get there. If you are relying on social security for retirement purposes then you will most likely have enough to feed yourself but not much else.

 

[Bonasababy]

View attachment 363803

huh?

A 10 percent expected rate of return is nearly twice what any advisor would suggest using---unless they are looking backwards. Pension reform experts have long pointed to unrealistic ROR expecations and their suggestions are more like 6 to 8 these days, And a 4 percent withdrawal rate on 11 million over a generous 30 years (living to 97 in this scenario) is nearly 65K a month, 52K if you want the amount to keep up with inflation.

FWIW I hope to retire several years younger than 67, my pension is going to be a fair amount higher than this example--AND (this is important to factor in) it keeps up with inflation using COLA's the rest of our lives--that's with the reduction to keep the same amount for my wife if I die first (it's even higher at lesser levels of reduction).

Lost entirely in these simple projections is any cost to support others. As there is cost, and there always will be cost, whether we like it or not.

That's the real value in SS, the biggest idiots or clueless in money handling can't mess it up.

The origin of the word "Social"...It is and was always designed to be a partial safety net to provide a base for retirement that yes helps the individual--but importantly helps others have to pay less for each other as well.

Bush (Dubya) ran for POTUS on an initial platform of ending or privatizing social security. Sounds good to some--but the initial cost is unbearable, especially for a country in as much debt as we are. Dubya dropped it like a rock soon after taking office.