Woof, the tax payer
I recently heard a reading of the Social Security pay-back article from the Wall Street Journal. It is wrong; and being in the WJS gave it credibility. The article left out one item in the calculations. It was .....
A few years back, I called the 800 number of the Social Security Agency to get a dump of my career pay-in, primarily to assure myself that it was correct. There was actually one year missing. I was able to find the appropriate 1099 and mail such to the SSA and follow-up with a later data dump to confirm. It was loaded-in in time.
That's not what this is about, but I do recommend each of you check up on your career pay-in while you can still find your 1099's. This is about the dirty little secret the politicians (even the good ones) know and rely upon; borrow now and pay-back with cheap money. The cheap money is caused by the accumulation of inflation. Run the numbers!
I have run my numbers on the Social Security (SS) that I and my employer ACTUALLY paid in towards my retirement. I have number crunched considering the documented inflation rate and the lowest interest rate the Federal Reserve charges their best customers; the (documented) Prime Rate. The results show that there was a tremendous amount of adjusted money paid in; significantly more than I will get back. Further, it refutes the comments that we will "get out much more than we paid in".
We actually LOSE money! The following summarizes the attached spread sheet.
APPARENT SS Paid IN by me and employer (THEN DOLLARS) $ 50,764
SS Paid IN ADJUSTED FOR INFLATION + INTEREST $ 363,969
APPARENT SS Pay-out to me over Life Expectancy (84) (No inflation) $ 245,520
True SS Pay-out ADJUSTED FOR 3 % INFLATION $ 168,181
The "you get out more" comment in the WSJ would improperly use
$ 245,520 / $ 50,764 = 384 % more than paid in.
The truth of the SS Game I have tabulated above shows that if I live to my life expectancy of 84, I will receive a return of
$ 168,181 / $ 363,969 = 46% of that paid in.
This was a very poor investment! I want my money back.
Now, the government put a "get even tax" on the money, my money, that they are giving back to me. Because I and my wife worked hard for 40 years and saved some money after putting six kids through college, receive a company pension that makes us look "rich", our social security check gets taxed; up to 85% is at risk. The truth of the "get even tax" is it a back door way of taxing our TAX EXEMPT MUNICIPAL BONDS. If you haven't had the opportunity of doing the 1040, they make you put your TAX EXEMPT income into the calcs which forces up the total and that's because we worked hard and saved some money for old age. Nobody who works for someone else in a non-management position is rich. but, the Feds think we are. That "get even tax" cost us $1,766 EXTRA last year which basically is 2 months of social security re-payment of my money.
I would like for you to challenge the experts with this information and try to get the truth out to the world!
Woof, the tax payer
|Social Security PAYBACK Analysis|
|Year||My Age||My Yearly||$ Buying||Adjusted for||Federal||Cumulative||Soc Sec Pay||Soc Sec Pay|
|(Aug)||$ Deduction||Power||Inflation||Discount||$ Amount||Monthly||Cumulative|
|Raw Pay-In to Soc Sec =||50,764||106.408||61,874.33||Pay-In =||363,969.98||Pay-Back =||168,181.20|