Social Security

[Sad Al]

If it is a Ponzi Scheme, it is the longest running, most successful Ponzi Scheme ever conceived.

Millions of elderly are saved from poverty by Social Security. It's well worth our investment. My mom can live on her own, and Thank God, not with me! Chances are you know someone who benefits from having Social Security, and maybe you don't even know how important it is to them.

[mindofmush]

Social Security is NOT a Ponzi Scheme nor welfare. It is an insurance program. Which is based on working and paying into the social security system. It was generally not intended to be someone's sole source of income. It was intended to be in tandem with company pension, savings, and/or part time work.

You can call it whatever "pie in the sky" name you want to make yourself feel good about "contributing" more taxes.

Insurance is a service you choose to pay for; SS is a tax, not a choice.

[JDD4J4J]

Social Security is NOT a Ponzi Scheme nor welfare. It is an insurance program. Which is based on working and paying into the social security system. It was generally not intended to be someone's sole source of income. It was intended to be in tandem with company pension, savings, and/or part time work.

You can call it whatever "pie in the sky" name you want to make yourself feel good about "contributing" more taxes.

Insurance is a service you choose to pay for; SS is a tax, not a choice.

The status of whether it's voluntary does not determine whether it's insurance. This is social insurance, specifically Retirement, Survivors, and Disability insurance. You work and pay for it, if you or a love one doesn't pay in, you unfortunately are not entitled to a benefit. Just like some employees have automatic life insurance policies or pension plans, though you have to work for that company to qualify.

[evilanne]

There are 2 programs under SSA: https://www.ssa.gov/sf/FactSheets/aians ... nalrev.pdf

[JDD4J4J]

There are 2 programs under SSA: https://www.ssa.gov/sf/FactSheets/aians ... nalrev.pdf

[JDD4J4J]

There are 2 programs under SSA: https://www.ssa.gov/sf/FactSheets/aians ... nalrev.pdf

Yes, Social Security Administration (SSA), facilitates 2 main programs. 1 is Social Secuity, which is Retirement, Survivors, and Disability Insurance. It is based on working and paying in the Social Security system. It is the matter of this discussion. The other is Supplemental Security Income (SSI), a needs based programs with strong restrictions on income, resources, and living arrangement.

[ProduceMan]

If someone is still working pass the year they would collect SS at 100%, would the benefit be lower than if they weren’t working at all?

[evilanne]

If depends on what you consider 100%. If you are still working at FRA, delaying one year increases your payout each year until age 70 when you would be maxed out >100%. At FRA, there is no means test so you could draw Social Security without means test but depending on your life expectancy it would probably make more sense to wait until 70 to draw SS.

The social security formula, although complex is based on 2 main factors, your top 35 years of earnings and which month you decided to be entitled between age 62 and age 70. There are 96 different months, there are 96 different choices. For those born before 1955, at 62 and 0 months, it is about 75% of your benefit, each month you wait it increases approximately .6% per month. At 66 and 0 month, Full Retirement Age(FRA), it is a Full 100% of the amount calculated on your top 35 years of earnings. If you go past that, you earned delayed credits, about 8% per year, maxing at age 70 for approximately 132% of your benefit.
The significance of FRA is not that it is the most you can get, because it's not, it's that its when the Annual Earnings Test(AET), no longer applies. For those that become entitled to retirement benefits before FRA there is an AET of how much earned income they can have before it affects their benefits. Unearned income has no affect. As of 2018, the AET is currently $17,040. If you go over this amount Social Security withholds $1 in benefits for every $2 earned, rounded to the nearest benefit amount. For each month a beneficiary is suspended for earnings, their benefit is increased the .6% per month the year following they obtain FRA. So for those months they get credit just as if they had not filed. After FRA, there is no AET, a person can earn an unlimited earned income amount and it does not affect whether they receive benefits.

[ProduceMan]

Started collecting at FRA while still working (no income limit), 100% benefit vs. haven’t been working and started to collect at FRA. Is the benefit amount the same.

Asking because this guy at work was a WG10 FT more than 20 years ago then got forced to take a GS4 FT until now. Presently making roughly 40 G’s is it possible to be still working and collect SS after FRA of only $1300. He’s had more then 35 yrs of work, probably 10 yrs as a 10 and 30 yrs as a 4.

[Tomanyiron]

If it is a Ponzi Scheme, it is the longest running, most successful Ponzi Scheme ever conceived.

Millions of elderly are saved from poverty by Social Security. It's well worth our investment. My mom can live on her own, and Thank God, not with me! Chances are you know someone who benefits from having Social Security, and maybe you don't even know how important it is to them.

I'm sorry Al, (and to all others), if I sounded insensitive to the plight of the poor and elderly. SS may be the best thing going for these folks. And a retirement check that they believe was earned gives people more self esteem.

Hey, in the complicated mess of politics, I don't know of what could have been done better. But the bottom line to me is, does it pay for itself? And can it continue to pay for itself, without taxing the wealthy more? More than they will ever receive back in benefits? Because if you take from the rich to keep up the poor, that = welfare.

It is a Ponzi Scheme because the more pay for the few. And that can't keep happening without 1-3 things taking place. 1- More contributors than beneficiaries. "How many workers does it take to pay for one Social Security recipient? As trends have continued, today there are just 2.9 workers per retiree—and this amount is expected to drop to two workers per retiree by 2030. The program was stable when there were more than 3 workers per beneficiary." https://www.mercatus.org/publication/ho ... ty-retiree 2- Reduce benefits. 3-Increase worker's withholdings.

[ProduceMan]

According to the Your Retirement Benefit: How It’s Figured (a Social Security form), for someone to get only $1300 a month at their FRA you would have to make less than an average of $30000 a month for 35 years.

To make it simple, let’s say your indexed earnings for 35 years was $30000.

30000 x 35 = 1050000
1050000 / 420 = 2500
90% of the first 895 of 2500 is 805.50
32% of the remaining of 2500, (which is 1605) is 513.60
Grand total of 1319.10

So how does the situation in my previous post happen. Unless they’re “just talking”

[evilanne]

Based on the grades, at FRA his SS should be higher since they take the highest 35 years that are inflation adjusted and he should be at higher end of pay scale given years of service. But is he talking about his actual SS, SS less medicare (not required if still working) or voluntary tax withholding?

[ProduceMan]

I believe it’s actual SS, what are the other 2 you mention?

[evilanne]

Typically Medicare Part A doesn't cost anything, Medicare Part B is usually deducted from SS at age 65 (Part C & D may also be deductible) for retirees; just like civilians have deduction for their FEHB medical plan(s) from their paycheck or CSRS/FERS annuity. Federal tax withholding is optional, since 50% or 85% of social security may be taxable it is a good idea to have withholding if you have other income above one of the thresholds.