Tuesday, October 9, 2012

The Truth About Social Security That Many Don't Want You to Know


You Pay over 15% of your Salary into the Social Security/Medicare System Every Year.


Republicans Call It an "Entitlement", Implying You Feel "Entitled" to Other People's Property.

Explanation: As a self-employed individual I pay both sides of the tax towards the Social Security/Medicare system.  That's 15.3% of my income each year.  I was shocked when I first saw the rate a couple of decades ago, since as an employee I paid less than half of that.  A little checking led to the realization that my employer paid half of the total amount that needed to be paid, matching my contribution. But I've also read, that employers maintain that if they did not have to pay their portion of the "payroll" taxes they would instantly transfer that money to their employees.

And, if you believe they would actually funnel the money into your paycheck, I've got a brand spanking new Ford Model T to sell you!  But it shows the mindset of the business community, and they probably do take it out of your salary. I know its completely taken out of mine.

So for the years you've worked the government has taken 15.3% of your salary for all intents and purposes for Social Security and Medicare

But for thirty years or more mainstream news media have joined the GOP in proclaiming  that program an "entitlement" like something wholly unearned passed down to you as an inheritance (a windfall that Republicans actually believe you should get in entirety without paying taxes on) and the GOP has acted like it's something you are demanding from poor starving billionaires.

I checked out a while back and found that even 6.2% interest applied to what is taken from only your paycheck for your Social Security alone would make a nice nest egg and keep you living at the same standard of living (as you averaged) for 20 years past your retirement.  And the calculator I used only paid the interest yearly. By paying daily (like money you owe is usually calculated) that number should be a good deal higher.   Social Security payments are not paid out at the amount you were receiving, but substantially less, so you should receive them for substantially longer than 20 years without costing the government anything.

Also, there is the charge that the government doesn't pay out interest on payroll taxes funds because they don't make interest on them.  But if the government avoids higher interest charges because it has the FICA funds sitting around waiting for people to retire, then it is receiving a kind of interest on them most (actually all because you and I are the government of the people, for the people and by the people) of that benefit should be passed on to you.  Also, there is still the employers side of  the SS payments, which, as I said probably are from what you might have once gotten, though I doubt they would ever be returned is the employer contribution disappeared.  That would instantly double your retirement years, so the government should be able to pay you for 40 years of retirement at the average of a years income out of your own funds.  And that's what the GOP and the mainstream news media don't want you to know.  Both of them are selling your rights to the same billionaires and centi-millionaires that are continually using their strings to pay them big interest free loans and providing them fantastic investment opportunities through wars or at least mega military purchases, as well, a prison building and maintenance and even tax cuts for the wealthy that never actually provide better paying jobs for us.

Finally, we should take the employers at their words and calculate double the amount that we actually pay for our Social Security, because I'm sure they do take it from our pay. So we could live 40 years beyond retirement and only take out what we've paid in and at a reasonable interest. Ask politicians where our money is. Did it already disappear into war and tax cuts for the wealthy?
And we need to put to bed the idea that young people pay for older people's retirement.  The numbers show they don't.

Don't let anyone call your Social Security an "entitlement".  You earned it, you saved it.  It's yours! 

But the Republicans want to take it away for tax cuts for fat cats and war.  

 Here is the compound interest calculator I used for the above calculations.

Picture above used via Creative Commons License thanks to Flickr user DonkeyHotey  who has no connection to this blog or blogger.

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