Go to Jeff Salisbury LWGate Home Page.From: BOB FORD <BOB_FORD@compuserve.com>
Subject: Social Security
Date: Mon, 15 Mar 1999 22:06:00 -0500
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I am not here to defend Social Security. However the article
by James Ferrin is very misleading. Let have "Just the facts" =
as an old TV show character was fond of saying. =
=
>Author: By James Ferrin =
>Before we clamor to "save" Social Security, let's first
>understand what we are trying to "save." The Social Security
>retirement system requires every working
>American to pay 12.4 percent of his or her income into the
>system.
=
This is just not true. Can anyone show me a copy of their W2
form where they paid over 6.2 percent of their wages as Social
Security taxes. Social Security taxes for a wage earner are 6.2
percent of the first $68,400. =
> The 12.4 percent is a tax on compensation -- wages or
>business profits. It is a nearly invisible tax to most Americans
>because one-half is withheld from the paycheck
Every check stub I have seen clearly shows the amount being
withheld for Social Security taxes so it is clearly VISIBLE.
>and one-half is paid by the employer with funds that could
>have been, but weren't, paid to the employee.
=
I have had employees in my business. As a business owner, I
paid a variety of taxes. Federal and State income taxes, sales
taxes, unemployment taxes, state disability taxes and of course
taxes on the wages of my employees. Does anyone think that
it they change the law today that I did not have to pay Social
Security taxes on my employees wages, I would call in each
employee and say "This 6.2 percent tax I have been paying on
your wages is really yours and I will now pay it to you". As
Brian Benben would say "Dream On". Anything "the
government" requires me to pay is a tax. If I don't have to pay
the tax, I make more profit. If I no longer had to pay sales tax,
would I say to my employees, "I no longer have to pay sales
tax so I will give that money to you"?
>The Social Security tax is not reported or itemized on the tax
>return for anyone but the self-employed. In this sense it is an
>enormous but somewhat invisible tax.
Has anyone received a W2 form that did NOT show how much
Social Security they paid in the last year? How could it be
invisible?
>In exchange, the worker receives a hope for a retirement
>cash flow starting at age 62, or 65 or sometime; the dates are
>subject to change. Today's retirees can collect "normal"
>benefits at age 65. Under rules adopted in 1981, those of
>us born after 1938 (including close to 80 million baby
>boomers) will qualify for benefits at a later age. The Social
>Security Administration recently notified me that under
>current rules, because I was born in 1956 (right in
>the middle of all those baby boomers) I can currently hope to
>qualify for normal benefits at age 66 and four months.
=
The worker also receives the following additional benefits
1. The workers spouse will receive 50 percent of what the
worker will receive.
2. The workers children will receive money until they are
adults if the workers die.
3. The workers children if the become disabled before they
reach the age of 22 will receive benefits.
4. The worker will receive benefits if he/she become disabled
and is unable to work. The benefits continue for life.
5. When the workers die, the workers spouse will get benefits
until the spouse dies.
6. The worker will receive medical and hospital insurance at a
very cheap rate that lets them choose their doctor and hospital.
There is not a test for a prior medical condition.
7. If the worker needs more money after age 65 and is poor a
Supplemental Social Income will be give him/her.
>I'm talking about over $675 per month just in Social
>Security retirement tax. This is a fairly significant monthly
>investment.
The most anyone paid in Social Security taxes is $354 per
month. =
>In fact, the unfortunate reality for many Americans is that it is
>the only monthly investment they can make. After paying it,
>along with all the other taxes and living expenses, there is
>precious little left over for saving and investing for retirement.
>Most working-class Americans live paycheck to paycheck,
>unable to save and invest over and above what Social
>Security takes. So, predictably, we produce yet another
>generation dependent on Social Security.
It is hard to believe that anyone making $68,400 (the Social
Security maximum wage) can not save any money for their
retirement. When I worked for wages, I made a lot less than
$68,400 and I saved and invested a lot of money.
=
>How about that Social Security retirement? Yes sir, can't you
>just wait till those nice, fat Social Security checks start rolling
>in? We instantly recognize, of course, the sarcasm. The fact is
>that Social Security offers only a poverty-level subsistence.
>Today's highest monthly benefit is about $1,200 per
>month. The average monthly benefit is just over $700. Is this
>a livable income or is this poverty?
Neither $700 or $1200 is a livable income. But who said it
should be. If you don't save for your retirement, you will be
poor in your retirement. Why would anyone think that Social
Security has to be the ONLY income we get in retirement.
> The Social Security Administration projects that if I am
>fortunate enough to live another 24 years, paying over $700
>per month into their system, that I will qualify for a retirement
>income of $1,630 per month.
=
Again, no one pays $700 per month into Social Security.
>James Ferrin is a certified financial planner based in Orem.
=
The question of whether Social Security is a good investment
is a good one. To find out, consider what it would cost to get
the same benefits as you get from Social Security from a
private source. You can talk to insurance companies and ask
to give you a quote on what it would cost to duplicate the
Social Security benefits I have listed above. I bet you will find
that it will cost a lot more than 6.4 percent of your pay.
BOB FORD
BOB_FORD@COMPUSERVE.COM
http://ourworld.compuserve.com/homepages/BOB_FORD/
Editor of the 57-56-55 CHEVY LIST and TURBOGLIDE
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