OT: Social Security

[XtremeJibber2001]

I'm doing a short speech on SS so I figured I'd post a question which google has not been able to provide...

Lets say from age 23 I make 50,000 a year for five years, at age 28 I make 75,000 for four years, and at age 32 I make 100,000 until I'm age 67.

SS then takes the 35 years that I made the most and calculates my retirement amount, which will end up being my PIA.

So according to my example, I've earned 100,000 for 35 years....what amount would I be paid each month?

From examples I've found, I figure that SS's PIA is about 3.9% of that persons average income over 35 years.

In this case the person's PIA would be 3,900.

Is this correct? Maybe I'm way off base here, but I worked at a bank for three years and never saw a PIA any higher than 1,100

Your thoughts?

[Bubba]

What's PIA?

Monthly payments right now max out around $2500/month I think, if that's what you're asking.

[XtremeJibber2001]

What's PIA?

Monthly payments right now max out around $2500/month I think, if that's what you're asking.

Well this is what I was asking...

If I make 100,000 a year from now until I retire, what would I normally see as a monthly payment today.

[Dr. NO]

If you make over the Max pay IN, you will collect the Max Pay out, provided the payments cover your total work time. Currently max payout is about $1600 or $1800 or something like that. Provided you average or make the max prior to collecting you get whatever that max is. You can make a Million per year, but there is still a cap on pay in and pay out.

Then again, you are in your 20's. Currently my collect time is over 63. As you are younger the powers to be in DC have said you will live longer and cannot collect until....... You are much older. So, don't expect much when the time comes. Save on your own, because Uncle Sam ain't gonna be there.

[St. Jerry]

If you make over the Max pay IN, you will collect the Max Pay out, provided the payments cover your total work time. Currently max payout is about $1600 or $1800 or something like that. Provided you average or make the max prior to collecting you get whatever that max is. You can make a Million per year, but there is still a cap on pay in and pay out.

Then again, you are in your 20's. Currently my collect time is over 63. As you are younger the powers to be in DC have said you will live longer and cannot collect until....... You are much older. So, don't expect much when the time comes. Save on your own, because Uncle Sam ain't gonna be there.

Amigo, just like those folks down in New Orleans, you're a fool if you think the government is going to be there when you need them. You are on your own. My advice is to max your 401k and IRAs and if you do get any social security money, that's just bonus.

[XtremeJibber2001]

If you make over the Max pay IN, you will collect the Max Pay out, provided the payments cover your total work time. Currently max payout is about $1600 or $1800 or something like that. Provided you average or make the max prior to collecting you get whatever that max is. You can make a Million per year, but there is still a cap on pay in and pay out.

Then again, you are in your 20's. Currently my collect time is over 63. As you are younger the powers to be in DC have said you will live longer and cannot collect until....... You are much older. So, don't expect much when the time comes. Save on your own, because Uncle Sam ain't gonna be there.

Amigo, just like those folks down in New Orleans, you're a fool if you think the government is going to be there when you need them. You are on your own. My advice is to max your 401k and IRAs and if you do get any social security money, that's just bonus.

Did you guys read the purpose of my post? I'm doing a speech to inform some of my classmates about SS (which they know very little I suspect).

I don't plan on using SS to retire, but look at what I found...

SS uses the 35 years in which you made the most to come up with your monthly stipend.

Assuming I make 100,000 for all 44 years of my career and I retire today, the most I can be paid each month is about 1800. However, In my 44 years making 100,000 I've contributed 6,200 a year (6.2% of my pay) for 44 years or 272800. Assuming I live only until I'm 100 (33 years of retirement), SS ends up paying out 712,800 (assuming I get the max each month) more then what I've contributed.

Is my math wrong or is this how it works?

On the other hand. Assume I make 100,000 for all 44 years of my career and I retire today, BUT that 6.2% goes in my pocket and I invest it. Assuming my return is in line with the S&P500 (10.5% yield) ... that same money taken from my pay each month ($516 a month) could make me a large sum of cash if i get the same yield we've seen historically. All that being said ... $516 a month at 10.5% over 44 years is approx 4,934,391 w/out accounting for inflation and taxes. Either way, individual investment beats SS without a problem. Even at 4% you'll have more then the 712K SS will pay you if you get the max PIA.

Again, is my math wrong or does this show how f'ed up SS is?

[yeti]

No you are not wrong. SS blows. I wish I could simply opt out - take the principle now that I have paid in and leave them the interest. I would forfeit any future benefits.

[BigKahuna13]

If you make over the Max pay IN, you will collect the Max Pay out, provided the payments cover your total work time. Currently max payout is about $1600 or $1800 or something like that. Provided you average or make the max prior to collecting you get whatever that max is. You can make a Million per year, but there is still a cap on pay in and pay out.

Then again, you are in your 20's. Currently my collect time is over 63. As you are younger the powers to be in DC have said you will live longer and cannot collect until....... You are much older. So, don't expect much when the time comes. Save on your own, because Uncle Sam ain't gonna be there.

Amigo, just like those folks down in New Orleans, you're a fool if you think the government is going to be there when you need them. You are on your own. My advice is to max your 401k and IRAs and if you do get any social security money, that's just bonus.

Did you guys read the purpose of my post? I'm doing a speech to inform some of my classmates about SS (which they know very little I suspect).

I don't plan on using SS to retire, but look at what I found...

SS uses the 35 years in which you made the most to come up with your monthly stipend.

Assuming I make 100,000 for all 44 years of my career and I retire today, the most I can be paid each month is about 1800. However, In my 44 years making 100,000 I've contributed 6,200 a year (6.2% of my pay) for 44 years or 272800. Assuming I live only until I'm 100 (33 years of retirement), SS ends up paying out 712,800 (assuming I get the max each month) more then what I've contributed.

Is my math wrong or is this how it works?

On the other hand. Assume I make 100,000 for all 44 years of my career and I retire today, BUT that 6.2% goes in my pocket and I invest it. Assuming my return is in line with the S&P500 (10.5% yield) ... that same money taken from my pay each month ($516 a month) could make me a large sum of cash if i get the same yield we've seen historically. All that being said ... $516 a month at 10.5% over 44 years is approx 4,934,391 w/out accounting for inflation and taxes. Either way, individual investment beats SS without a problem. Even at 4% you'll have more then the 712K SS will pay you if you get the max PIA.

Again, is my math wrong or does this show how f'ed up SS is?

You missed the employer contribution to SS, which matches your contribution so 13.4% of your salary goes to SS. But even with that SS has significant problems.

Personally, I view it as armed robbery on the part of the government and assume I will see no benefit from it ever.

[XtremeJibber2001]

If you make over the Max pay IN, you will collect the Max Pay out, provided the payments cover your total work time. Currently max payout is about $1600 or $1800 or something like that. Provided you average or make the max prior to collecting you get whatever that max is. You can make a Million per year, but there is still a cap on pay in and pay out.

Then again, you are in your 20's. Currently my collect time is over 63. As you are younger the powers to be in DC have said you will live longer and cannot collect until....... You are much older. So, don't expect much when the time comes. Save on your own, because Uncle Sam ain't gonna be there.

Amigo, just like those folks down in New Orleans, you're a fool if you think the government is going to be there when you need them. You are on your own. My advice is to max your 401k and IRAs and if you do get any social security money, that's just bonus.

Did you guys read the purpose of my post? I'm doing a speech to inform some of my classmates about SS (which they know very little I suspect).

I don't plan on using SS to retire, but look at what I found...

SS uses the 35 years in which you made the most to come up with your monthly stipend.

Assuming I make 100,000 for all 44 years of my career and I retire today, the most I can be paid each month is about 1800. However, In my 44 years making 100,000 I've contributed 6,200 a year (6.2% of my pay) for 44 years or 272800. Assuming I live only until I'm 100 (33 years of retirement), SS ends up paying out 712,800 (assuming I get the max each month) more then what I've contributed.

Is my math wrong or is this how it works?

On the other hand. Assume I make 100,000 for all 44 years of my career and I retire today, BUT that 6.2% goes in my pocket and I invest it. Assuming my return is in line with the S&P500 (10.5% yield) ... that same money taken from my pay each month ($516 a month) could make me a large sum of cash if i get the same yield we've seen historically. All that being said ... $516 a month at 10.5% over 44 years is approx 4,934,391 w/out accounting for inflation and taxes. Either way, individual investment beats SS without a problem. Even at 4% you'll have more then the 712K SS will pay you if you get the max PIA.

Again, is my math wrong or does this show how f'ed up SS is?

You missed the employer contribution to SS, which matches your contribution so 13.4% of your salary goes to SS. But even with that SS has significant problems.

Personally, I view it as armed robbery on the part of the government and assume I will see no benefit from it ever.

I did realize that my employer matches the 6.2%, but now that I put that into the equation, we're really being screwed. Imagine if you had 13.4% of your income to invest...even at 4% you'd make a killing.....getting 10.5 would be just stellar

[BigKahuna13]

If you make over the Max pay IN, you will collect the Max Pay out, provided the payments cover your total work time. Currently max payout is about $1600 or $1800 or something like that. Provided you average or make the max prior to collecting you get whatever that max is. You can make a Million per year, but there is still a cap on pay in and pay out.

Then again, you are in your 20's. Currently my collect time is over 63. As you are younger the powers to be in DC have said you will live longer and cannot collect until....... You are much older. So, don't expect much when the time comes. Save on your own, because Uncle Sam ain't gonna be there.

Amigo, just like those folks down in New Orleans, you're a fool if you think the government is going to be there when you need them. You are on your own. My advice is to max your 401k and IRAs and if you do get any social security money, that's just bonus.

Did you guys read the purpose of my post? I'm doing a speech to inform some of my classmates about SS (which they know very little I suspect).

I don't plan on using SS to retire, but look at what I found...

SS uses the 35 years in which you made the most to come up with your monthly stipend.

Assuming I make 100,000 for all 44 years of my career and I retire today, the most I can be paid each month is about 1800. However, In my 44 years making 100,000 I've contributed 6,200 a year (6.2% of my pay) for 44 years or 272800. Assuming I live only until I'm 100 (33 years of retirement), SS ends up paying out 712,800 (assuming I get the max each month) more then what I've contributed.

Is my math wrong or is this how it works?

On the other hand. Assume I make 100,000 for all 44 years of my career and I retire today, BUT that 6.2% goes in my pocket and I invest it. Assuming my return is in line with the S&P500 (10.5% yield) ... that same money taken from my pay each month ($516 a month) could make me a large sum of cash if i get the same yield we've seen historically. All that being said ... $516 a month at 10.5% over 44 years is approx 4,934,391 w/out accounting for inflation and taxes. Either way, individual investment beats SS without a problem. Even at 4% you'll have more then the 712K SS will pay you if you get the max PIA.

Again, is my math wrong or does this show how f'ed up SS is?

You missed the employer contribution to SS, which matches your contribution so 13.4% of your salary goes to SS. But even with that SS has significant problems.

Personally, I view it as armed robbery on the part of the government and assume I will see no benefit from it ever.

I did realize that my employer matches the 6.2%, but now that I put that into the equation, we're really being screwed. Imagine if you had 13.4% of your income to invest...even at 4% you'd make a killing.....getting 10.5 would be just stellar

Yeah you would. Odds are though that the employer would pocket that money and not give it to you.

[XtremeJibber2001]

Amigo, just like those folks down in New Orleans, you're a fool if you think the government is going to be there when you need them. You are on your own. My advice is to max your 401k and IRAs and if you do get any social security money, that's just bonus.

Did you guys read the purpose of my post? I'm doing a speech to inform some of my classmates about SS (which they know very little I suspect).

I don't plan on using SS to retire, but look at what I found...

SS uses the 35 years in which you made the most to come up with your monthly stipend.

Assuming I make 100,000 for all 44 years of my career and I retire today, the most I can be paid each month is about 1800. However, In my 44 years making 100,000 I've contributed 6,200 a year (6.2% of my pay) for 44 years or 272800. Assuming I live only until I'm 100 (33 years of retirement), SS ends up paying out 712,800 (assuming I get the max each month) more then what I've contributed.

Is my math wrong or is this how it works?

On the other hand. Assume I make 100,000 for all 44 years of my career and I retire today, BUT that 6.2% goes in my pocket and I invest it. Assuming my return is in line with the S&P500 (10.5% yield) ... that same money taken from my pay each month ($516 a month) could make me a large sum of cash if i get the same yield we've seen historically. All that being said ... $516 a month at 10.5% over 44 years is approx 4,934,391 w/out accounting for inflation and taxes. Either way, individual investment beats SS without a problem. Even at 4% you'll have more then the 712K SS will pay you if you get the max PIA.

Again, is my math wrong or does this show how f'ed up SS is?

You missed the employer contribution to SS, which matches your contribution so 13.4% of your salary goes to SS. But even with that SS has significant problems.

Personally, I view it as armed robbery on the part of the government and assume I will see no benefit from it ever.

I did realize that my employer matches the 6.2%, but now that I put that into the equation, we're really being screwed. Imagine if you had 13.4% of your income to invest...even at 4% you'd make a killing.....getting 10.5 would be just stellar

Yeah you would. Odds are though that the employer would pocket that money and not give it to you.

Well....either way my speech is open and close....i'm supposed to convince the class in 5 minutes that removing SS is in our best interest.

Using that 4,934,391 I calculated above....If I lived to 100 I'd be getting approx 12K a month for 33 years....now that's retirement!

[Steve]

So according to my example, I've earned 100,000 for 35 years....what amount would I be paid each month?

$0.

[Bubba]

Let's make a few corrections.

There's a maximum that you pay into SS every year so if you make $100,000 per year you're (at the moment) above the maximum so you're paying a smaller percentage of your total income into SS as your income grows above the taxable limit. Same for your employer. That threshhold grows higher every year as does your pay (we assume) and there's a COLA on the payout you will receive upon retirement so your expected payout grows too.

That being said, SS is a way to set a floor income to retirees at the low end of the pay scale. Society has decided that doing so is a good thing and redistributes wealth to a limited extent to accomplish that societal goal. SS has been one of the most successful government programs ever devised in this country. When it was designed, however, there were precious few, if any, alternatives for the majority of people. That's not the case today, and it is also not the case that we have 15 - 20 people paying in for every person taking out, nor is it the case that 65 is old age as it was in the 1930s. The country has changed and SS must change with it.

[XtremeJibber2001]

Let's make a few corrections.

There's a maximum that you pay into SS every year so if you make $100,000 per year you're (at the moment) above the maximum so you're paying a smaller percentage of your total income into SS as your income grows above the taxable limit. Same for your employer. That threshhold grows higher every year as does your pay (we assume) and there's a COLA on the payout you will receive upon retirement so your expected payout grows too.

That being said, SS is a way to set a floor income to retirees at the low end of the pay scale. Society has decided that doing so is a good thing and redistributes wealth to a limited extent to accomplish that societal goal. SS has been one of the most successful government programs ever devised in this country. When it was designed, however, there were precious few, if any, alternatives for the majority of people. That's not the case today, and it is also not the case that we have 15 - 20 people paying in for every person taking out, nor is it the case that 65 is old age as it was in the 1930s. The country has changed and SS must change with it.

The max that they tax is $94,200 ... I used $100,000 to make the calculations easier. The amount of chage just using $94,200 is not much different, but yes, technically my calculations are slightly off.

It might be nice for the people at the low end of the scale, but it's certainly not good for the person that makes $94,200 a year!

I don't think SS will ever change, I'll be left with 6.20% of my yearly income to a program I barely benefit from.

[Bubba]

Let's make a few corrections.

There's a maximum that you pay into SS every year so if you make $100,000 per year you're (at the moment) above the maximum so you're paying a smaller percentage of your total income into SS as your income grows above the taxable limit. Same for your employer. That threshhold grows higher every year as does your pay (we assume) and there's a COLA on the payout you will receive upon retirement so your expected payout grows too.

That being said, SS is a way to set a floor income to retirees at the low end of the pay scale. Society has decided that doing so is a good thing and redistributes wealth to a limited extent to accomplish that societal goal. SS has been one of the most successful government programs ever devised in this country. When it was designed, however, there were precious few, if any, alternatives for the majority of people. That's not the case today, and it is also not the case that we have 15 - 20 people paying in for every person taking out, nor is it the case that 65 is old age as it was in the 1930s. The country has changed and SS must change with it.

The max that they tax is $94,200 ... I used $100,000 to make the calculations easier. The amount of chage just using $94,200 is not much different, but yes, technically my calculations are slightly off.

It might be nice for the people at the low end of the scale, but it's certainly not good for the person that makes $94,200 a year!

I don't think SS will ever change, I'll be left with 6.20% of my yearly income to a program I barely benefit from.

Greedy little bastard, aren't you? You have an obligation as a citizen to help those in need (up to a point) and SS has been extremely successful in elevating the elderly out of poverty over the past 70 or so years.

It's necessary for people at the low end of the scale and the whole society benefits from it. You, has a potentially higher paid worker, benefit as well since those people spend money and keep the economy going instead of ending up on some other, more expensive and less efficient program. Beyond that, we as a society still have a responsibility to our fellow citizens - one for all and all for one, remember?

Nevertheless, the program needs changes.