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Question on American Social Security .......

Crazy Horse

Crazy Horse

Well-known Member
Lots of interesting threads on yesterday's post on your social security system south of the border. Here's a quick question ........ is the American social security program tied to your employment/work contributions over the years when you were/are in the work force? So in other words, you are paying into it over the years?

Up here we have the CPP or Canadian Pension Plan ...... a federal pension based on your employment contributions. You can start drawing that at 60 years of age (that might have changed now, not sure). The longer you wait after that, the more they send you every month.

We also have the federal OAS pension as well (old age security) which is not based on employment contributions but on your years of Canadian residency between 18 and 65 years of age (I think that's the basic formula they use for the OAS calculations). So for example, even a person who never entered the work force is still eligible at age 65 for the OAS up here (which is about $575 per month for somebody in residence for the whole 47 years of that time span).
 

Yes, but it's a pay as you go system, sort of a ponzi scheme. IOW, no, "the gov't" doesn't out your contributions in an interest bearing account someplace and hold if for you. The system is in the red and is unsustainable unless there are some big changes in the future, ie- means testing, increased age to draw, reduced benefits, etc.
 
Yes, payments are based on your income over the years and thus your pay-in. You also pay into Medicare (over 65 health care), but to a lesser extent, and everybody gets the same Medicare benefits.
 
I should have mentioned that everyone up here is eligible for the OAS (the amount depending on your residency
years) but at a certain level of income, they start clawing it back and reducing the monthly payment. I
think that amount is somewhere about $75,000 per year when the clawback starts and it continues until about
$115,000 or thereabouts. By that time your OAS has disappeared. If you made say $74,000 per year then you
would get the full OAS benefit every month but if you made $115,000 you'd get none of it. People between
those two levels for income would get different amounts ..... less as you approach the top end.
 
We are petitioning Pres nnalert to put the money back into SSI that congress has stolen the system over the years. Wonder how that will turn out?
 
That was a problem for many years up here too with our CPP (funded from employment contributions). The federal government was just dumping those contributions into their general fund and it paid for all kinds of other projects and government expenses. I believe that has stopped years ago and now all the money goes into a true pension fund that is invested, etc.
 
And the main reason social security is in trouble is that our illustrious lawmakers, of both persuasions, robbed from the social security fund over the years to pay for their pet projects. They have yet to repay any of these funds that they stold.
 
$74,000 per year, Really?
I receive the grand total of $3,000 per year. It would be a lot more if Ronnie Reagan had not passed a law that limited my benefits.
 
6.2% of your earnings are withheld and matched by your employer,along with 1.45% Medicare tax. If you're self employed,you have to pay the entire 15.3% yourself. That's right off the top of your net income before any other deductions. Except business expenses of course. Then we have to pay State and Federal income tax after the SS "contribution".
 
Do you honestly think there is more there to pay you more? I turn 50 this year - my goal is for Social security to last as long as my mother (83 years old) lives. If it is still around in 20 years when I retire I'll be more than a small bit surprised.


Since social security is based on the younger generation paying for the older generation your benefits should be based on what your children pay in. If that were the case my mom would have gotten around $90,000 to $100,000 last year. People who raised kids that contribute nothing to Social Security (and society) would get nothing.
 
How about putting more people to work they would contribute to the fund.Bring back the jobs that went overseas because of EPA and other govt regs
 
Collect it from foreign workers who come here,then send them home so they never collect it. Oh wait,we already do that.
 
As stated - it was to help you with retirement - it was never intended to be only source for retirement income.


60 years ago a large majority of men continued working for years past "retirement age". Now many quit working before retirement age is reached. The average "retirement age" in the US is now 63.


http://www.epi.org/publication/myth-early-retirement/
 
You hit the nail on the head, for decades the representatives of this country stole money from SS and used it to pay for other things. If they would have left that money alone we would not have a problem funding SS now. But now you have some in congress who want to cut benefits because there is no money. I think congress should take a pay cut to help balance the SS budget.
 
Well not $70+ G's from the government. Once you hit that threshold from all your different sources of income (for example, you could still be working, investments, other pensions, etc) then the Old Age Security pension amount claw back begins.
 
Slick Willie bent us all over when he started taxing SS benefits. Slick was not a Repub.
 
(quoted from post at 09:00:11 03/28/17)
Yes, but it's a pay as you go system, sort of a ponzi scheme. IOW, no, [b:0d7e66d599]"the gov't" doesn't out your contributions in an interest bearing account someplace and hold if for you.[/b:0d7e66d599] The system is in the red and is unsustainable unless there are some big changes in the future, ie- means testing, increased age to draw, reduced benefits, etc.
Click to expand...


From the SSA website:
"By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds.
In the past, the trust funds have held marketable Treasury securities, which are available to the general public. Unlike marketable securities, special issues can be redeemed at any time at face value. Marketable securities are subject to the forces of the open market and may suffer a loss, or enjoy a gain, if sold before maturity. Investment in special issues gives the trust funds the same flexibility as holding cash."
 
As said CPP is a contribution based plan. OAS can be received by anyone who has lived in Canada for 10 years, whether they have ever worked or not. The pay out is the same for all - $578 per mo. - (that is not even remotely fair, just the way it is). There is, as said, a point of income level when 'claw back' occurs, up to a point where it zeros out (I think).
 
"Oh wait,we already do that. "

Only foreign workers who are here legally and report their income. A large percent work for cash and send it home every week.
 
"younger generation paying for the older generation your benefits"

Don't forget about the 2 million people external_link added to SS by changing the eligibility rules for disability. That made the unemployment rate look a lot better too.
 
I live in Indiana where some pay a % of our income into SS and employer pays in same amount. Self employed people are required to pay both parts according to my stock broker. That may or may not be true.

State employees also have a pension fund. I was told teachers are also state employees and their school corp pays into the state fund and I think so does the state. Not sure exactly how that works.

Our neighbor to the west, Ill, decided years ago to not fund their state employees pension fund. Now the fit hits the sham with more people retiring and no money. State hasn't got a budget for a few years. No money. Raised taxes and some people are moving out of Ill faster than any other state.

Please someone from Ill fill in all the details.

Same with Indiana state employees.

So it's possible some people can draw a pension and SS when they retire. I think the pension rule is the 85 rule. You can retire early as age 55, If your age and years of work experience for the state totals 85.
 
The vast majority of farm workers are legal and do have SS withheld but never collect on it. You need to stop taking Hannity's word for it on some of these issues.
 
Source for this claim? If you are withholding SS and not paying it in I'm sure the IRS would love to have a talk with you. They can shut you down and seize your assets based on the suspicion of doing that - long before they have to prove it in court. If it turns out they were wrong you'll get a I'm sorry post it note from the IRS.
 
Right for some of your comments but wrong on one thing. Say your ten-year rule is correct (I didn't know that), OK so that makes sense. But if someone lived in Canada for example say only a total of 12 years (between ages 18 and 65), then he is eligible for only 12/47 of the pension amount you mention (the 47 denominator being the number of years difference between 18 and 65) .... or about 1/4 of the $580 (or $135). Those numbers might be approximate, maybe the exact formula is a wee bit different. I have a Canadian friend who is in that situation having spent a lot of his life between 18 and 65 south of the border. He does not get the same CCP amount every month that I do (and I spent my whole life here).
 
Checked further, the denominator in the calculation is 40, so you get 1/40 of an OAS pension for every year you reside in Canada after age 18 and up to 65. So in my example from earlier, instead of getting 12/47 of a pension (a guy living here for 12 of those years), that person would get 12/40 (or 30% of about $580 = $174) compared to a guy like me that has lived here all of those years between 18 and 65. So the 1/40 per year is a bit more generous actually than the 1/47 I mentioned earlier. That's the formula they use. Either way, someone living here less than full time in that 47-year time span (between 18 and 65) gets less than 100% from their OAS pension.
 
Are you so cynical that you honest to God believe after a business went through all the nightmare of hiring H2a workers,they would risk getting hung for not following tax law?
 
> Yes, but it's a pay as you go system, sort of a ponzi scheme. IOW, no, "the gov't" doesn't out your contributions in an interest bearing account someplace and hold if for you. The system is in the red and is unsustainable unless there are some big changes in the future, ie- means testing, increased age to draw, reduced benefits, etc.

Actually, your contributions ARE held in an interest-bearing account. The SS Trust Fund invests in US government securities, which, regardless of the actaul solvency of our federal government, are still considered to be the safest investments on the planet.

The problems with Social Security are almost entirely due to demographics: The US population is growing older; people sometimes collect benefits for decades, while there are fewer young workers paying into SS. And yes, SS can be fixed, but few politicians of either party are willing to make the hard choices needed to ensure the trust fund doesn't go broke.
 
The state/municipal pension mess is, in many ways, a bigger problem than Social Security. It played a major role in the Detroit bankruptcy, but Detroit was the tip of the iceberg. There are thousands of state and municipal pension funds in the country, almost every one a ticking time bomb.

Back in the sixties and seventies, state and local governments promised their employees generous pension benefits while underfunding their pension funds. This of course allowed them to get employees to work for less while kicking the costs down the road. Pension funding was based on unrealistic revenue projections; interest rates and inflation were in the double digits through the seventies so the projections seemed plausible even if they weren't. And when interest rates dropped in the eighties and nineties, pension funds still thought the stock market would bail them out. It didn't.

The Detroit pension situation was resolved by coercing employees and retirees to accept significantly smaller benefits. And that's the model that will be used everywhere else for the obvious reason there's no other solution.
 
(quoted from post at 12:07:53 03/28/17) Another factor is that SS was originally intended to help you in retirement. Over time they added eligibility for all kinds of disabilities.
Click to expand...

SS original intention was to put more cash in the Depression era economy, or so we were told, but it's actual purpose was to buy votes with public money. A rather smart guy named Franklin figured out that if you gave people "free" money, they'd vote for you eternally. That idea is working out pretty good which is why no one will address the problems with finding all the "free" money to hand out.
 
(quoted from post at 15:28:24 03/28/17)
(quoted from post at 09:00:11 03/28/17)
Yes, but it's a pay as you go system, sort of a ponzi scheme. IOW, no, [b:f81fe22083]"the gov't" doesn't out your contributions in an interest bearing account someplace and hold if for you.[/b:f81fe22083] The system is in the red and is unsustainable unless there are some big changes in the future, ie- means testing, increased age to draw, reduced benefits, etc.
Click to expand...





From the SSA website:
"By law, income to the trust funds must be invested, on a daily basis, in securities guaranteed as to both principal and interest by the Federal government. All securities held by the trust funds are "special issues" of the United States Treasury. Such securities are available only to the trust funds.
In the past, the trust funds have held marketable Treasury securities, which are available to the general public. Unlike marketable securities, special issues can be redeemed at any time at face value. Marketable securities are subject to the forces of the open market and may suffer a loss, or enjoy a gain, if sold before maturity. Investment in special issues gives the trust funds the same flexibility as holding cash."
Click to expand...

The SS admin does not take the money Joe Sixpack pays in every year and put it in an account marked "Joe Sixpack" that earns interest for Joe. The funds go into the so called "Trust Fund", which it is a Trust Fund in name only, where they are borrowed on or paid out. It's smoke and mirrors and is just money deposited and money paid out. SS almost went broke in 1983, started operating in the red in 2010. I suppose bankers, politicians and bureaucrats can play word games that make things look swell, but the reality is that your SS contributions go out just as fast as their put in.
 
(quoted from post at 22:57:23 03/28/17) > Yes, but it's a pay as you go system, sort of a ponzi scheme. IOW, no, "the gov't" doesn't out your contributions in an interest bearing account someplace and hold if for you. The system is in the red and is unsustainable unless there are some big changes in the future, ie- means testing, increased age to draw, reduced benefits, etc.

Actually, your contributions ARE held in an interest-bearing account. The SS Trust Fund invests in US government securities, which, regardless of the actaul solvency of our federal government, are still considered to be the safest investments on the planet.
set a few years back
The problems with Social Security are almost entirely due to demographics: The US population is growing older; people sometimes collect benefits for decades, while there are fewer young workers paying into SS. And yes, SS can be fixed, but few politicians of either party are willing to make the hard choices needed to ensure the trust fund doesn't go broke.
Click to expand...

Just checked and the interest bearing accounts are paying 2-3% to SS, and that's only because the rate was set a few years back. That doesn't even keep up with inflation, and I mean actual inflation/cost of living as opposed to the gov't reported "inflation rate" which excludes so much of the actual costs of things. It's not sustainable and it's inaccurate to claim that SS is actually achieving any fund growth due to interest.

I will agree that demographics are a major player in the problems SS has. But was recognized decades ago, in fact IIRC it was recognized when the program began, but ignored. If we want it to survive, the very first thing we have to do is go to means testing. If you have a pension that would meet a certain level, you don't get SS- period. I imagine my wife and I would fall into that category. Lets start treating what SS has become as what it is- an entitlement- and accept that only certain people are going to get it. Not public employees like me, not the military, not union workers, teachers, etc. And tell all the people still working that they are going to be paying the bill and a great many of them will never see a dime of it. Explain to them that's it's their responsibility to plan for their retirement. I'd like to see the politician of any party that has the backbone to get up and say that out loud.
 
I misread your post.

I thought you said employers were withholding the SS tax but not paying it into the government. What you are saying is that it is being withheld and paid in but the workers will never collect on it.


I agree - the IRS is a huge enforcer of the SS tax - the primary payroll tax that helps the government live and breath. In the construction industry the big crack down are people hired as independent contractors but the IRS wants them reclassified as employees.
 
(quoted from post at 10:44:27 03/29/17) The state/municipal pension mess is, in many ways, a bigger problem than Social Security.
The Detroit pension situation was resolved by coercing employees and retirees to accept significantly smaller benefits. And that's the model that will be used everywhere else for the obvious reason there's no other solution.
Click to expand...

Except in Illinois, their Supreme Court ruled the state Constitution requires the full amount be paid to state employees. The only solution there is higher taxes to pay the benefit. Those that can get out should, my wife's cousin and husband are gone when they retire, they said they can't afford to live there without their full time jobs.
 
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