Social Security COLA 8.7% for 2023

[KennyG]

No SS tax is collected when earned income is over $147K this year. Next year the paid-up point will be $160K.

Remove the cap and SS will be solvent for a long time.

But it's not quite that simple. SS benefits are based on amount paid in. Increasing the cap will result in increasing the benefits for high earners unless the law is changed.

 

[Torvy]

When I started teaching 5 years ago, I stopped paying into SS and pay into TRS instead.

The whole system makes no sense. You pay in 6.2%. Your employer matches another 6.2%. If self-employed, you pay both halves. If you were able to invest that money rather than give it to the government, you would have millions at the end of a 50 year career, even if you make relatively low wages. The interest on your millions would exceed your maximum payout from SS.

 

[Gale Hawkins]

When I started teaching 5 years ago, I stopped paying into SS and pay into TRS instead.

The whole system makes no sense. You pay in 6.2%. Your employer matches another 6.2%. If self-employed, you pay both halves. If you were able to invest that money rather than give it to the government, you would have millions at the end of a 50 year career, even if you make relatively low wages. The interest on your millions would exceed your maximum payout from SS.

You're forgetting social security was set up for people that may have never even paid into social security in 1938 there's the story of the one guy that work for just a few months in 38 and went up drawing for like many many years.

On a whole people will not provide for their retirement funds.

A guaranteed income with inflation protection included is about as good as it's going to get for the masses.

 

[KennyG]

When I started teaching 5 years ago, I stopped paying into SS and pay into TRS instead.

The whole system makes no sense. You pay in 6.2%. Your employer matches another 6.2%. If self-employed, you pay both halves. If you were able to invest that money rather than give it to the government, you would have millions at the end of a 50 year career, even if you make relatively low wages. The interest on your millions would exceed your maximum payout from SS.

Again, I think your TRS is a pension plan and not an insurance plan. If you had died, would TRS have provided full benefits to your survivors, independent of how much you had paid in? Would TRS support a disabled dependent? I'm not saying it's great insurance, but insurance is a lot different than a pension plan.

 

[Torvy]

Again, I think your TRS is a pension plan and not an insurance plan. If you had died, would TRS have provided full benefits to your survivors, independent of how much you had paid in? Would TRS support a disabled dependent? I'm not saying it's great insurance, but insurance is a lot different than a pension plan.

Nope. TRS has both an insurance and a pension plan. (2 different things). I also have a 403b (like a 401k). Since I am fully vested into SS, I will get little or nothing from TRS.

 

[Torvy]

You're forgetting social security was set up for people that may have never even paid into social security in 1938 there's the story of the one guy that work for just a few months in 38 and went up drawing for like many many years.

On a whole people will not provide for their retirement funds.

A guaranteed income with inflation protection included is about as good as it's going to get for the masses.

I'm not forgetting. Social Security was set up to make people dependent upon the government to secure votes for the politicians. The sales pitch was as a safety net. The system was designed on the German system with a retirement age of 65 because it was the average life expectancy at the time. The plan was always that half of the recipients would die before they could collect.

Also, your spouse does not get your payout. They only get the difference if the spouse who made more dies first.

This plan is horrible for the masses. The government could have made a small tax on the retirement of the 'masses' to fund retirement for the less fortunate. Instead, they could have required a 10% investment like a 401k for everyone. Now we have to give 12.4% to the government AND put 15% aside for ourselves.

 

[Gale Hawkins]

I'm not forgetting. Social Security was set up to make people dependent upon the government to secure votes for the politicians. The sales pitch was as a safety net. The system was designed on the German system with a retirement age of 65 because it was the average life expectancy at the time. The plan was always that half of the recipients would die before they could collwct.

Also, your spouse does not get your payout. They only get the difference if the spouse who made more dies first.

This plan is horrible for the masses. The government could have made a small tax on the retirement of the 'masses' to fund retirement for the less fortunate. Instead, they could have required a 10% investment like a 401k for everyone. Now we have to give 12.4% to the government AND put 15% aside for ourselves.

Your imagination about SS you can keep because the real SS numbers at our house are greater than expected and the Cola $$$ is up sized due to retiring at 70.

 

[Torvy]

I'm not a math expert, but those that I know have confirmed retiring at 70 with SS is a sucker's bet.

The numbers are only bigger because you let them keep your money for 8 extra years. Had you taken that money and invested it, you would have even more. COLA is less than inflation, so you are still losing money over time.

More than expected just means you had low expectations.

 

[KennyG]

I'm not a math expert, but those that I know have confirmed retiring at 70 with SS is a sucker's bet.

The numbers are only bigger because you let them keep your money for 8 extra years. Had you taken that money and invested it, you would have even more. COLA is less than inflation, so you are still losing money over time.

More than expected just means you had low expectations.

I'll be the exception, I guess. I worked until I was 68 because I enjoyed it, waited until 70 to take SS so I got the extra 32%. I also delayed taking my pension annuity payments until then and also delayed 401K and IRA withdrawals as long as possible, because I had enough other savings at retirement for my needs. With my family history and current health, I expect to live into my 90s, so I think it's a good strategy.

 

[bigtiller]

But it's not quite that simple. SS benefits are based on amount paid in. Increasing the cap will result in increasing the benefits for high earners unless the law is changed.

Well that's a silly way to run things. By all means, change that law.