Financial prep - don't rely on Social Security

[The Heretic]

On the positive side, because of Social Security few people in our society contribute financially to the support of their aged parents. Nor do we need to have large families in order to guarantee someone will support us in our old age. Instead of thinking about the system as "getting back what I paid in," it might be less painful to think of the payroll tax as "my contribution to the support of my parents in their old age." In countries without such a system, children are expected to provide for their parents if not actually take them into their homes and care for them in their "golden years."

For me, it is kind of the other way around.

First, my parents did fine financially. Between the inheritance from selling the family farm, and then selling their own farm, and both of them working for most of their careers - they did okay, and left a bit of their wealth to us three boys.

My dad died first and I encouraged my mom to not think about an inheritance for us boys - but to spend her $ being happy - plus she lost a chunk in the housing bubble (a lot of people did), so while I inherited a nice sum, it did not make me rich.

Both my parents worked for the state and my dad got a pension, so I am not sure if they paid into SS (I think my mom might have). We (my brothers and I) were a bit concerned about her expenses though - because the last years of her life she was in a somewhat expensive assisted living facility, but she died before it became an issue.

But for me - my kids can't really support me if they had to - the best they could do for me financially would be for me to move in with them - which I would not want to do - I like being independent and living alone. Plus, I don't need to as SS covers my expenses (barely). I am now pulling about 2% per year from my IRAs, but SS means that I don't need to pull more - I think my IRAs would cover my expenses indefinitely though.

The plan is to leave my IRAs for my daughter as she may have to retire early due to health issues, and even with their two incomes, they barely make their expenses.

I do admit, however, that the Self-employment Tax, the "other half" of the payroll tax, or the employer contribution, is oppressive and burdensome for those with a small business. I personally experienced the painfulness of this when my wife had her own small business. Although her business was fairly successful, it seemed like .gov took an awfully big bite, which goes unnoticed when one is on a payroll.

IIRC, half of the self-employment tax is deductible?

I always consider both halves (employee & employer) as something that should just be paid outright to the employee. I have always advocated for no income tax on anybody, but rather a FLAT sales tax on every good and service, with no exceptions, no deductions, no rebates, no minimums and every entity is taxed (i.e., no exceptions for non-profits/et. al.). I would also advocate for a balanced budget - i.e., no deficit spending - only spend what the gov gets in revenue.

 

[Provincial]

Hence the open border.

Sure, bringing in a whole bunch of unskilled labor (as if all of them will work) will produce enough tax revenue to pay for the ever-increasing percentage of retirees.

Can someone tell me how all these businesses that pay cash to employ undocumented workers keep from paying taxes on the profits? To take an expense, you have to document that expense.

 

[wired]

Sure, bringing in a whole bunch of unskilled labor (as if all of them will work) will produce enough tax revenue to pay for the ever-increasing percentage of retirees.

Can someone tell me how all these businesses that pay cash to employ undocumented workers keep from paying taxes on the profits? To take an expense, you have to document that expense.

A lot dont pay cash. The illegal aliens use someones social security number and our government's computer systems are so incredibly bad its sometimes 6 months to a year before they get caught and move onto the next job no one else wants to work. Food manufacturing plants are 90%+ Hispanic. They'll work for a while , get called up the HR office and they know what to do. Walk out the parking lot and leave. Seen it hundreds of times. Its a big black hole of money.

 

[Hawaiian]

SS is paying out a huge amount in fraudulent SSDI claims. There is a certain group of people who are scamming the system to get their "free money". They visit their friendly neighborhood doctors office who writes reports declaring them totally disabled. Many are young, fit and totally capable of working.
Our government is too incompetent to go after them. This is adding to the drain on the SS funding. The same applies to the doctors who are scamming the Medicare/Medicaid system.

 

[Hawaiian]

SS is a great program. I worked my whole life and had payroll deductions for SS and Medicare. While, yes we could end that and invest the money in our own retirement accounts, however the majority of people would not do so as they live paycheck to paycheck and would spend the money. SS is like a forced savings account for when we get old and can no longer work.

It worked great for me as my wife would have spent the payroll savings before I would have been able to invest it.
I started collecting SS at age 66. I kept working until last year when I retired at age 73. My SS checks were deposited in to a separate savings account that was off limits for spending. We lived off my paycheck from work. We saved a huge amount over the 7 year period. Paid off the mortgage and all bills before retiring and still had a nice sum left over. SS is not enough to live on so keep paying into those 401k/IRA plans. You will be glad you did when you get old and grumpy like me. When I was younger I did not expect to live this long. Well surprise surprise, I am still kicking and glad I have some retirement savings.

 

[The Heretic]

It worked great for me as my wife would have spent the payroll savings before I would have been able to invest it.

Mine would have done the same thing. My remedy?

She is now my ex-wife - has been my ex for 35+ years.

When we separated and she had to actually work, she was not happy with me at all - now she blames me for everything that has happened since, including her going into triple bankruptcies, being in trouble with the IRS for claiming 99 dependents, being evicted multiple times for not paying her rent, living in a storage unit with her cats, being arrested for criminal trespass and spending several months in jail, losing her teeth from drug abuse - and those are just the things I heard about.

Now granted, I would not have invested the $ that she would have spent; I would have used it to pay rent, buy food, pay for electricity. When I was starting out, jobs were scarce and I was unemployed a lot, barely lived paycheck to paycheck when I did have a job. It wasn't until I went in the military that I had enough income to live on - but my ex-wife still managed to spend more than I brought in and that, among other things, was just too much for me to tolerate.

 

[Cavedweller]

IIRC, half of the self-employment tax is deductible?

That is correct. One half is deductible from taxable income, so it reduces one's income tax somewhat. However, it is a deduction (or an adjustment to income? - it's been a while since I had to deal with it so not sure), not a credit, so it is not a 1 to 1 proposition.

I always consider both halves (employee & employer) as something that should just be paid outright to the employee. I have always advocated for no income tax on anybody, but rather a FLAT sales tax on every good and service, with no exceptions, no deductions, no rebates, no minimums and every entity is taxed (i.e., no exceptions for non-profits/et. al.).

Such sensible solutions to our overly complex tax code would make it impossible for legislators to hand out tax breaks to their favored donors.

I would also advocate for a balanced budget - i.e., no deficit spending - only spend what the gov gets in revenue.

Seems to work for state government, with plenty left over for unneeded and wasteful programs. However, it would probably get in the way of the federal government financing all of its foreign wars.

 

[arakboss]

SS is paying out a huge amount in fraudulent SSDI claims. There is a certain group of people who are scamming the system to get their "free money". They visit their friendly neighborhood doctors office who writes reports declaring them totally disabled. Many are young, fit and totally capable of working.
Our government is too incompetent to go after them. This is adding to the drain on the SS funding. The same applies to the doctors who are scamming the Medicare/Medicaid system.

Everyone of these SSDI claimants means one less person that will work full time and pay into Social Security. This will be the main downfall of the entire system.

 

[Mono1]

When we separated and she had to actually work, she was not happy with me at all - now she blames me for everything that has happened since, including her going into triple bankruptcies, being in trouble with the IRS for claiming 99 dependents, being evicted multiple times for not paying her rent, living in a storage unit with her cats, being arrested for criminal trespass and spending several months in jail, losing her teeth from drug abuse - and those are just the things I heard about.

Sounds like you made a good decision ultimately, Bro'.

Maybe you just didn't know how to pick 'em?

 

[The Heretic]

Sounds like you made a good decision ultimately, Bro'.

I actually should have at least tried to have us in marriage counseling, but I was selfish, foolish and young. I know a lot of what my ex-wife did afterwards was her decision and mostly her fault, but I bear some responsibility too.

I had no real idea how fragile she was, much less what would happen afterwards.

We - myself, my daughter and my wife - all paid heavily later.

So no I don't think I made the right decision - all of the really bad stuff happened after we separated. I very much regret that, even to this day many decades later. If for no other reason than the impact on my daughter, I should have at least tried to make it work - but I just gave up for very foolish and stupid reasons.

 

[The Heretic]

That is correct. One half is deductible from taxable income, so it reduces one's income tax somewhat. However, it is a deduction (or an adjustment to income? - it's been a while since I had to deal with it so not sure), not a credit, so it is not a 1 to 1 proposition.

I only had to deal with it a couple of times.

Such sensible solutions to our overly complex tax code would make it impossible for legislators to hand out tax breaks to their favored donors.

Legislators mostly do the big deductions/exemptions/etc. for the voters - stuff like mortgage interest rate deductions.

 

[The Heretic]

Maybe you just didn't know how to pick 'em?

I didn't.

First and foremost, I was just interested in sex and the inevitable pregnancy resulted in a teenage marriage.

Second, I knew she had issues - and I tried to break up with her once when we were dating. But she begged me not to and I caved instead of breaking up. That was when I should have been firm, not later.

 

[dangerranger60]

I didn't.

First and foremost, I was just interested in sex and the inevitable pregnancy resulted in a teenage marriage.

Second, I knew she had issues - and I tried to break up with her once when we were dating. But she begged me not to and I caved instead of breaking up. That was when I should have been firm, not later.

If your ex has not remarried in all the years since, she may be able to get half your SS. Mine threatened that several times, but she is on husband number 6, and has very little chance of getting any more from me. we have been divorced 44 years now. our lawyer told us she had no claim after re marring the next time. 6 times is just spiking the ball! DR

 

[arakboss]

If your ex has not remarried in all the years since, she may be able to get half your SS. Mine threatened that several times, but she is on husband number 6, and has very little chance of getting any more from me. we have been divorced 44 years now. our lawyer told us she had no claim after re marring the next time. 6 times is just spiking the ball! DR

My understanding is that an ex spouse collecting on yours, doesn't impact your benefits.

 

[The Heretic]

If your ex has not remarried in all the years since, she may be able to get half your SS. Mine threatened that several times, but she is on husband number 6, and has very little chance of getting any more from me. we have been divorced 44 years now. our lawyer told us she had no claim after re marring the next time. 6 times is just spiking the ball! DR

Oh she threatened me with this issue about 6 years ago - a couple years before I retired at FRA

To put some context around this; my daughter is estranged from her mother to the point that she does not want her to know anything about her, not her address, not her ph #, not anything personal AT ALL. I comply with my daughter's wishes naturally - although it is not out of ill will towards my ex.

Without going into details, I understand that my ex is mentally ill so while I do not excuse her behavior, I see that exposure of my daughter to her is not good for my daughter. I don't want any exposure to her either.

Anyway - my ex wanted info about my daughter, and tried to contact me thru FB to get it. When I did not respond, she tried to contact my sister-in-law, using a long ranting letter with lies and delusions she has making herself out to be a victim/etc.

My SIL saw thru it, let me know, and did not respond, blocking her on social media, etc.

I then get the usual rant and threat that she falls back on when she doesn't get her way. She stated that would make me "pay for it in a couple of years" and that I would regret turning everybody in my family against her (she did this to herself - I said nothing to my SIL about it, other than acknowledging her response).

She probably did get the increase; over the decades, I made a LOT more than she ever made, and she somehow got onto SSDI decades ago well short of required retirement age (probably found a doctor who believed her hypochondriac claims).

I was not & am not concerned; many people misunderstand what is involved. In short, it is an empty threat; her getting more SS based on my benefit amount has no impact whatsoever on my benefit amount.

If you're getting Social Security retirement benefits, some members of your family may also qualify to receive benefits on your record. If they qualify, your ex-spouse, spouse, or child may receive a monthly payment of up to one-half of your retirement benefit amount. These Social Security payments to family members will not decrease the amount of your retirement benefit.

Benefits Planner: Retirement | Benefits For Your Family | SSA

If you qualify for Social Security retirement benefits, your spouse, ex-spouse, or children may also qualify to receive benefits on your record. These payments will not decrease your retirement benefit.

www.ssa.gov

 

[billdeserthills]

Everyone of these SSDI claimants means one less person that will work full time and pay into Social Security. This will be the main downfall of the entire yada yada

The Shocking Amount of Money Congress Has Stolen From Social Security -- to the Penny[/H1]
By Sean Williams – Feb 20, 2023

• 
  America's top retirement program is facing a $20.4 trillion funding shortfall through 2096.
• 
  Congress is often blamed for Social Security's problems, with some people claiming lawmakers have raided the trust funds.
• 
  Lawmakers deserve their fair share of blame, but not for the reasons some folks might think.

The Shocking Amount of Money Congress Has Stolen From Social Security -- to the Penny | The Motley Fool

Don't believe everything you read on the internet.

www.fool.com

 

[billdeserthills]

That is correct. One half is deductible from taxable income, so it reduces one's income tax somewhat. However, it is a deduction (or an adjustment to income? - it's been a while since I had to deal with it so not sure), not a credit, so it is not a 1 to 1 proposition.

Such sensible solutions to our overly complex tax code would make it impossible for legislators to hand out tax breaks to their favored donors.

Seems to work for state government, with plenty left over for unneeded and wasteful programs. However, it would probably get in the way of the federal government financing all of its foreign wars.

The U.S. national debt is rising by $1 trillion about every 100 days
PUBLISHED FRI, MAR 1 202411:47 AM ESTUPDATED MON, MAR 4 202411:58 AM EST

Michelle Fox@MFOXCNBC
WATCH LIVE
KEY POINTS

• The nation's debt now stands at nearly $34.4 trillion, as of Wednesday.
• Since June, the last two $1 trillion jumps occurred in about 100 days.

 

[The Heretic]

SS is paying out a huge amount in fraudulent SSDI claims. There is a certain group of people who are scamming the system to get their "free money". They visit their friendly neighborhood doctors office who writes reports declaring them totally disabled. Many are young, fit and totally capable of working.
Our government is too incompetent to go after them. This is adding to the drain on the SS funding. The same applies to the doctors who are scamming the Medicare/Medicaid system.

My ex never wanted to work, just spend.

Even after she had to work (I did pay child support, and I paid for all of my daughter's medical expenses and private schooling), she was always looking for a way that she did not have to work, and she spent most of earned $ on new furniture/etc., skimping on food and utilities/etc.

With SSDI she found a sustainable way to not work - except she kept spending $ that she didn't have, until she got evicted, then repeat and rinse. The last time I saw her, she was in poor shape and actually could not work - that was after being evicted several times and living in a storage unit, then on the street.